NextNav Holdings LLC is approaching a combination with a special-purpose acquisition company that would take the next-generation GPS firm public and value it at around $ 1.2 billion, according to people familiar with the matter.
Founded in 2007, NextNav says its platforms can locate the specific interior position of a device, including the floor of a building it is on. Vertical positioning data is an approach for regulators to improve responses to emergency calls to 911 in urban areas and could also have consumer applications in sectors such as gaming and transportation that require the specific location of a device. NextNav has licenses to use wireless airwaves that support telecommunications networks nationwide.
The McLean, Va., Company is close to a deal to merge with SPAC Spartacus Acquisition Corp.,
people said. Spartacus focuses on deals in the telecommunications, media and technology industries. The combination is expected to be announced in the next few days.
NextNav is expected to generate approximately $ 410 million in cash through the deal with money held by SPAC and a private investment in public equity, or PIPE, associated with the merger, they said. PIPE investors in the deal are expected to include Koch Strategic Platforms, a subsidiary of Koch Investments Group, and funds managed by Fortress Investment Group.
Current NextNav investors include funds managed by Fortress and funds managed by Goldman Sachs Asset Management. XM Satellite Radio founder Gary Parsons is the chairman of the NextNav board.
SPACs like Spartacus are shell companies that go public to acquire a private company and go public. They are also called blank check companies. Merging with a SPAC has become a popular way for startups to quickly raise large sums and access investors excited about speculative technologies. One reason is that SPAC mergers allow startups to make projections about their business, which is not allowed in a normal IPO.
SPACs have raised about $ 105 billion so far in 2021, breaking last year’s record above $ 80 billion, according to data provider SPAC Research. The 2020 total was more than the amount previously raised in SPAC’s nearly 30-year history of the market.
Some companies that are publicly traded through blank check companies have become popular investments for individual investors, while many professionals argue that they are overvalued and are betting that their share price will fall. That tension has fueled volatility and put some of the SPAC-linked companies at the center of the recent daily trading frenzy. This same week, Clover Health Investments Corp. shares more than doubled before falling 24% on Wednesday.
In another example of the risks of investing in certain companies merging with SPAC, electric truck startup Lordstown Motors Corp. warned Tuesday that it does not have enough cash to start production and is not sure it will be able to continue operating.
Write to Amrith Ramkumar at [email protected]
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It appeared in the print edition of June 10, 2021 as ‘GPS Firm NextNav To List Via SPAC Merger’.