Waldencast (WALD) trades 3% higher on $1.20bn merger
19:35, 15 November 2021
Waldencast Acquisition Corp. stock rose as much as 2.96% after announcing it was acquiring make-up brands Obagi and Milk Makeup in a transaction valuing the combined entity at $1.2bn (£893.3m).
Shares traded as high as $10.05 on the news, up 2.75% from Friday’s 9.75 closing share price, before closing at $10. The combined company will trade over the Nasdaq exchange under the ticker WALD.
The joint acquisition is funded by $345m of IPO proceeds, $333m of forward purchase agreements, $105m from a private placement and $475m in rollover equity. Obagi equity holders will receive 20.5% of the combined entity and Milk Makeup equity holders will receive 14.9%, according to records filed with the US Securities & Exchange Commission (SEC).
The merger has been unanimously approved by the boards of all three companies. The transaction is scheduled to close in the first half of 2022.
Credit Suisse and JPMorgan Securities acted as financial advisors for Waldencast on the transaction, with Skadden, Arps, Slate, Meagher & Flom acting as legal advisor. Lazard acted as legal advisor for Obagi. Financo Raymond James acted as financial advisor for Milk Makeup.
“Partnering with Obagi and Milk Makeup is a major milestone in our ambition to build a best-in-class global multi-brand beauty platform, which will be home for the next generation of high-growth, purpose-driven brands,” said Waldencast CEO Michael Brousset. “We believe the brands will benefit strongly from the Waldencast ecosystem, bringing operational scale, and attracting best-in-class talent and capabilities.”
White Plains, New York-based blank cheque firm Waldencast went public 15 March with a $300m offering led jointly by Credit Suisse and JPMorgan Securities at $10 per share.
Waldencast styles itself as a disruptor in the beauty and wellness sector, as consumers move away from traditional retail outlets. “We believe that consumers in the beauty and wellness space are frequently asking brands to resonate with their own evolved values and embody those attributes,” the company stated in its prospectus supplement filed with the SEC.
“In addition, these consumers are increasingly turning to digital communities and platforms for brand discovery, engagement, and purchasing. As a result, disruptive brands are shifting away from a reliance on traditional retailing and moving towards omnichannel outlets.”
Read more: Analyst says SPACs will stay in demand