The world of blank check companies and specialty purpose acquisition companies continues to have a place in the markets. This is where private equity meets venture capital, allowing a management team to raise capital that will allow them to acquire a private company that will suddenly be a public company after the merger. In some ways, blank check IPOs are like buying a draft choice (shares and rights) for an unnamed draft pick (company IPO) in the future.
Landcadia Holdings II Inc. (NASDAQ: LCAHU) has priced its initial public offering of 27,500,000 units at the industry standard price of $10 per unit. They were set to launch in Nasdaq trading on Tuesday, May 7, 2019.
What makes Landcadia II special is that it is a blank check company led by Tilman Fertitta as co-chair and chief executive officer. The company is sponsored by Fertitta Entertainment and Jefferies Financial Group. Richard Handler, CEO of Jefferies, is Landcadia II’s co-chair and president.
As with most blank check offerings, the specific industry can be anything if an opportunity arises. That said, the company intends to focus a business combination in the consumer, dining, hospitality, entertainment and gaming industries. That search also will include technology companies operating in those specific industries.
Jefferies was the sole book-running manager for the Landcadia II offering. The underwriting firm was granted a 45-day option to purchase up to an additional 4,125,000 units at the initial public offering price ($10 per unit) to cover overallotments.
That “II” in the company name is because Fertitta previously launched Landcadia Holdings. That blank check company acquired a company called Waitr in 2018. This is a Lake Charles, Louisiana-based restaurant platform for online food ordering and delivery in the southeastern United States. That $308 million acquisition was completed on November 15, 2018, and it is now Waitr Holdings Inc. (NASDAQ: WTRH). The company currently has a $641 million market cap based on the $8.90 share price, with a post-merger trading range of $8.81 to $15.06.
As far as the breakdown of how each unit of Landcadia II is structured, the press release said:
Each unit consists of one share of Class A common stock and one-third of one redeemable warrant to purchase one share of the Class A common stock at a price of $11.50 per share. After the securities comprising the units begin separate trading, the shares of Class A common stock and the warrants are expected to be listed on Nasdaq under the symbols “LCA” and “LCAHW,” respectively. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.
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