As many special purpose acquisition traders wait with bated breath on whether Churchill Capital IV ( CCIV) and Lucid Motors officially tie the knot on Tuesday as rumors suggest, we've had quite a few other definitive agreements hit the wires Monday morning. A few of these names appear to be worth a watch.
Ceres Acquisition Corp. ( CERAF) is buying Parallel, a U.S. multi-state cannabis operator. The deal will value Parallel around $1.88 billion and come with a $225 million private investment in public equity (PIPE), giving the post-merger company $430 million in cash. Parallel operates in five states: Pennsylvania, Florida, Massachusetts, Nevada, and Texas, so it's in three of the biggies, but Texas stands out most to me. It's not a name we often see; however, when that state opens up, I imagine we'll see huge sales. While seen as a conservative state, we do have Willie Nelson as an advocate, and we've seen a huge influx of folks from California, Illinois, and the East Coast -- many places with legalized marijuana. Look for it to become a huge market in the future. Additionally, Parallel has management with a successful track record in retail. That's a plus in my view.
Trident Acquisition ( TDAC) signed a deal to purchase Lottery.com. This is an Austin-based company that enables customers to play state-sanctioned lottery games from their home or on the go. I don't know about you, but I hate standing in long lines to buy a Powerball ticket when the jackpot hits a level where $10 worth of soon-to-be losses pay for a fun 24-hour what-if dream scenario.
With an enterprise value of $526 million on the deal, now closer to $800 million, this one still looks cheap to me. The company has been growing gross revenue at an annualized rate of 322% from 2016 through 2020. Its customer acquisition cost is barely over $4 while the first-year gross revenue from those customers is almost $31 per customer. Lottery.com has done this only being in 11 states. It plans to expand to 34 states by 2023. I've begun buying shares in this name as I see it offering a strong long-term risk versus reward at these levels.
Rodgers Silicon Valley Acquisition ( RSVA) did something I've seen no other SPAC do with its buy of Enovix. The PIPE is priced at $14, rather than $10. It would be a great trend if it can hold as it will help raise the odds of success for retail traders buying pre-deal SPACs at a premium to $10.
Enovix is the designer and maker of lithium-ion batteries. I'm sure many were drawn to the discussion about developing a strategy for future electric vehicle battery production, but they would be overlooking the computing markets the company already sells to using its proprietary 3D cell architecture. They have their hands in wearables, personal computers, augmented reality, virtual reality, and mobile communications. While I'm not chasing today, this will be one I'll watch for on the options side when those become available or with a decent pullback.
Last is NextGen Acquisition Co. ( NGAC) buying Xos, a manufacturer of fully electric class 5 through class 8 commercial vehicles. The $2 billion valuation seems on the low end of the commercial side, especially considering the 6,000 unit backlog and optional order. This, combined with fleet-as-a-service, puts it in the attractive category for me as well. I need to dig a bit more, but I've been favoring commercial EV as compared to consumer EV for the next 12 to 18 months.
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Among the names that felt pain were NL Industries, Fossil Group and Manchester United.
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