SPAC Queen Fires Warning to 30% of Blank-Check Firms - Bloomberg

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Welcome to the Bloomberg Deals newsletter. Today, SPAC dealmaker Betsy Cohen says many blank-check firms will fail, Boston Scientific strikes a nearly $2 billion deal, and Southwest Gas defies activist investor Carl Icahn.

Today's top stories

• Boston Scientific is paying $1.75 billion for Baylis Medical.
• Southwest defies activist Icahn to buy Questar for $2 billion.
• TradeZero is in talks to merge with Dune Acquisition.
• Saudi Exchange Tadawul is said close to IPO at $4 billion value.

30% will fail

About 30% of the more than 400 SPACs looking for targets today will fail, blank-check sponsor Betsy Cohen said at the Bloomberg Invest Global Conference Wednesday.  — Crystal Tse

“We will see some failures and the cycle will then cleanse itself,” Cohen said. 

We are in the middle of the SPAC cycle and some of the shake out will happen within the next year, she said. Cohen has sponsored nine SPACs, including one that took Perella Weinberg public. 

Betsy Cohen

Blank-check deals have seen better days. 

IPOX, an index that tracks SPAC performances, is down 11% this year, while the S&P 500 is up 15% over the same period.

SPAC listing and mergers have significantly slowed from a year ago. Investors are increasingly choosing not to participate in the merger, causing high redemption. 

The composition of the SPAC targets has also changed. There haven’t been as many of what Cohen called “Dream SPACs” — pre-revenue companies in space tourism or the electric vehicle market that promise a bright future far ahead.

“The public market and even private investors wanted to believe that something very special was going to happen, even though it's very hard to be grounded and predictive of what might happen,” she said.

As SPACs typically have two years to find a target, it is still too early to determine their fate. That said, we probably don't need more new faces in the market.

“Everybody and everybody's brother-in-law have raised a SPAC, so I think it's about time to focus on the experienced sponsor,” Cohen said. 

M&A focus

Saudi Arabia is close to formally lifting a ban on the Qatar-based sports broadcaster BeIn, potentially removing a major obstacle to the kingdom’s pursuit of historic U.K. soccer team Newcastle United FC, writes David Hellier.

Boston Scientific will 

buy Baylis Medical for an upfront payment of $1.75 billion to expand its offering of approved technologies for heart patients. 

Southwest Gas will buy Questar Pipelines from Dominion Energy  for about $2 billion, defying objections from activist investor Carl Icahn. Dominion announced the deal hours after the billionaire disclosed a 4.9% stake in Southwest and  warned that the move would be a mistake.

Carl Icahn

Photographer: Victor J. Blue/Bloomberg

TradeZero, an online brokerage that provides free and subscription-based software for stock trading, is in talks to merge with Dune Acquisition Corp., a blank-check firm, Gillian Tan reports.

Carlyle is weighing a sale of Sunsho Pharmaceutical, a Japanese contract manufacturer of health and nutrition products, amid interest from potential investors, write Manuel Baigorri and Takako Taniguchi. The buyout firm is seeking a valuation of at least $500 million for the asset.

Jones Lang LaSalle has picked China Resources Mixc Lifestyle Services as the preferred bidder for its China real estate management unit, writes Vinicy Chan. China Resources Mixc is poised to trump rivals including Sunac Services and China Vanke in the battle for the asset.

IPO watch

Saudi Arabia’s stock exchange, Tadawul, is close to announcing plans for a long-awaited IPO that could value it at as much as $4 billion, write Reema Alothman and Dinesh Nair.

U.S.-traded Chinese streaming video site iQiyi has picked banks for its Hong Kong second listing. The Netflix-style service is working with advisers including Bank of America, CLSA and Goldman Sachs on the share sale, write Julia Fioretti and Vinicy Chan.

Photographer: Jeanne Frank/Bloomberg

Online luxury-watch retailer Chronext is postponing its initial public offering, joining dozens of listings that have been pulled worldwide over the past month.

Who’s news

It’s been a busy 24 hours of comings and goings in banking and private equity. Here are some of the highlights: 

Citi  has hired Luisa Leyenaar Huntingford from Goldman Sachs to co-run its global infrastructure business. Based in London, she’ll head the division alongside New York-based Todd Guenther — Dinesh Nair reports. 

Health-care dealmaker Julia Kahr left Blackstone to join rival Cinven as a partner in charge of its U.S. investing activities, reports Michelle F. Davis.

Matt Chlystek has swapped Moelis for Morgan Stanley, where he’ll focus on consumer, food and agriculture business advisory, writes Kiel Porter. 

And finally, Deutsche Bank is targeting more business in the Nordic market by utilizing its balance sheet and bringing in additional bankers, its CEO in the region tells Rafaela Lindeberg.

VC report

Payments software provider Modern Treasury said it’s valued at more than $2 billion after a funding round led by Altimeter Capital, reports Katie Roof.

Pattern, which started out selling fridge magnets and other trinkets on Amazon’s third-party marketplace, on Wednesday said it raised $225 million in new outside investment at a valuation of about $2 billion. 

Elemy, a provider of in-home and online pediatric behavioral care, has vaulted to unicorn status after raising $219 million in a funding round led by SoftBank Vision Fund 2.

Best of the rest

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