What happens after the Business Combination Agreement is signed?
Once the business combination agreement is signed, the SPAC and target company will work as quickly as they can to finalize and make the requisite filings with the SEC. For de-SPAC transactions where the merger consideration consists of shares of the SPAC, it is customary for the SPAC to file a registration statement on Form S-4 to register the shares issued in connection with the de-SPAC transaction and obtain the approval of its shareholders. In most cases, the SPAC solicits shareholder approval of the de-SPAC transaction through a proxy statement, which will typically be combined with the Form S-4 as a joint Form S-4 registration/proxy statement. Less frequently, the SPAC will conduct a tender offer, in lieu of shareholder approval, that gives the SPAC’s public shareholders the opportunity to tender their shares. How quickly the transaction can close will largely depend on the time it takes to get the S-4 registration/proxy statement on file with the SEC and complete SEC review of the filing.
At the same time, the SPAC will present the transaction to existing investors to ensure their support at the time of the shareholder vote and raise additional investment, if needed, to close the transaction. At the time that the SPAC shareholders have an opportunity to vote, they will have the option to redeem their shares in the SPAC. If redemptions come in at a level that would jeopardize the SPAC’s ability to complete the transaction because of a failure to satisfy the minimum cash condition, the sponsor may try to raise additional capital to replenish cash lost to redemptions, and if necessary, seek to revisit the terms of the acquisition with the target company. Once the acquisition closes, the SPAC will file a “Super 8-K,” effectively the equivalent of an Exchange Act registration statement. Although the Super 8-K is a significant filing, the information required will mostly be the same information that was included in the S-4 registration/proxy statement or tender offer documents. It may, however, require additional financial statements for the target company.
