Forest road Acquisition Corp., a special-purpose acquisition company (or SPAC), backed by the entertainment finance firm of the same name with a Hollywood-strong roster of consultants, has found its target and announced plans to buy a digital fitness specialist Beach body Company and take it out to the public.
The transaction includes a three-way merger between Forest Road SPAC, Myx Fitness Holdings, a home-affiliated fitness platform, and Beachbody of Santa Monica. The deal values the combined business at $ 2.9 billion and is expected to add more than $ 420 million in cash on the balance sheet.
This is one of the first high-profile, SPAC-backed entertainment acquisitions through an explosion of financial instruments also known as blank check companies. Supporters, in this case Forest Road, gather seasoned executives and consultants, create a SPAC, bring it to the public, and look for an operating company to acquire. Merging with a SPAC is a faster and easier way for a private company to go public.
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“When we increased our SPAC, we were determined to find a company with a strong, proven business model and significant growth potential where we could add value to our experience in creating and monetizing premium content. Beachbody fits these goals perfectly, ”he said Tom Staggs, Former COO & CFO of Disney and Forest Road’s Board Member and Chairman of the Strategic Advisory Committee.
Beachbody will continue to be led by Carl Daikeler, the Co-Founder, Chairman and CEO of Beachbody, Jon Congdon, Co-Founder of Beachbody and CEO of Openfit. Strategic advisor to Forest Road Kevin Mayer, former CEO of TikTok and top executive at Disney, will join the combined company’s board of directors. Beachbody management and shareholders are rolling over 100% of their shares and will own around 84% of the pro forma deal at close.
Openfit brings its own celebrity pedigree. In December, the company acquired Ladder, a nutrition company founded by LeBron James and Arnold Schwarzenegger, who are now investors.
Upon completion, The Beachbody Company will be the parent company of three premium content and technology companies: Beachbody On Demand (BOD), Openfit and Myx. The transaction is expected to close in the second quarter of 2021 and the combined company will be listed on the NYSE under the new ticker symbol BODY.
Beachbody’s rapid subscriber growth is based on the concept of community and accountability with a mission focus that capitalizes on the tremendous growth in the health and wellness space. The company’s inclusion and retention metrics confirm the quality and depth of its content library and direct-to-consumer (DTC) technology. I see a lot of parallels at Beachbody with our work at Disney, where we aggressively accelerated our digital transformation and used our content to build Disney +, ESPN + and Hulu, ”said Mayer.
“I am very excited to join the board of directors to drive the growth and value creation of the company and its shareholders”, said Mayer. In prepared remarks on a quick phone call, he noted the boom and opportunity in the fitness space and expected the company’s revenue to grow from an estimated $ 1.1 billion in 2021 to over $ 3 billion in 2025.
Forest Road announced the SPAC in October and went public in November. SPACS have up to two years to identify takeover targets.
The Forest Road team consists of three former Disney executives – Staggs, Mayer and Salil Mehta, the chief financial officer. Other directors, officers and strategic advisors include Shaquille O’Neal, Peter Schlessel, Keith Horn, Sheila Stamps, Teresa Miles Walsh and Martin Luther King III.
SPACs can target any sector and media / entertainment have their fair share.
Bright Lights Acquisition Corp, a SPAC operated by former Dick Clark Prods. CEO Mike Mahan and Co-Chairman of the Board Allen Shapiro and John Howard started trading in January. The singer-songwriter is also part of the board Ciara Wilson, Chairman and CEO of the Mandalay Entertainment Group Peter Guber and Endeavor President Mark Shapiro. The company is looking for a $ 500-1.5 billion consumer goods, media, entertainment, or sports company that is ready to grow and go public.
Thrillist and PopSugar parenting group Nine Media created a SPAC to help them do digital deals.
John Malone founded Liberty Media Acquisition Corporation SPAC.
Media and entertainment managers Harry Sloane and Jeff Sagansky have launched a number of SPACs in recent years, including the Diamond Eagle and the Flying Eagle Acquisition Corps. Flying Eagle has acquired the Skillz mobile gaming platform and will bring it to the public. Diamond Eagle merged with DraftKings and created the only pure sports betting company. The Playboy will become after the merger with the Mountain Crest Acquisition Corp. SPAC go public again. And Gerry Cardinale’s RedBird Capital is launching a SPAC called RedBall Acquisition that targets sports media real estate, including data analytics companies or possibly a sports franchise.
CEO and former Hearst executive Joanna Coles is looking for acquisitions with her SPAC, Northern Star Acquisition Corp.
Politicians have moved into the room. Former House Speaker Paul Ryan is chairman of a SPAC he founded called Executive Network Partnering Corp. Earlier this month, former Commerce Secretary Wilbur Ross founded his own SPAC, Ross Acquisition Corp. II, with Larry Kudlow on the board.