Atlantic Coast Acquisition II is the 2nd SPAC for mobility (NASDAQ: ACAB)

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A quick overview of the acquisition of the Atlantic Coast II

Atlantic Coastal Acquisition Corp. II (NASDAQ: ACAB) sold $300 million from an IPO at a price of $10.00 per unit, under the terms of its most recent S-1/A regulatory filing.

SPAC (Special Purpose Acquisition Company) intends to pursue a merger with a company in the next-generation mobility sector.

Given the team’s lack of success in SPACs and the recent failed merger attempt in its first SPAC, my view of CABO is a short-term expectation.

Atlantic Sponsor Background and Performance

Atlantic has 3 executives at the head of its sponsor, Atlantic Coastal Acquisition Management II LLC.

The sponsor is led by:

  • Shahraab Ahmad – CEO, who has extensive experience in US and European capital markets
  • Burt Jordan – President, who was previously Vice President of Global Purchasing Operations at Ford Motor Company
  • Tony Eisenberg – Chief Strategy Officer, who served on the advisory board of Komma, an urban mobility company

The SPAC is the 2nd vehicle of this executive group.

The first SPAC of this group of sponsors recently ended its merger plans with its target company, the 3D printing company Essentium, citing a change in market conditions while retaining certain rights to receive payments to the ‘to come up.

Atlantic’s SPAC IPO Terms

New York, NY-based Atlantic sold 30 million units consisting of one Series A common stock and one-half warrant at a price of $10.00 per unit for gross proceeds of approximately $300 million, not including the sale of customary subscription options. .

The IPO also provided for one-half warrant per share, exercisable at $11.50 per share at any time from the later of 12 months after the closing of the offering or 30 days after the completion of its initial business combination and expiring 5 years after the completion of the initial business combination or earlier upon takeover or liquidation.

SPAC has 15 months to complete a merger (initial business combination). If he fails to do so, shareholders may redeem their shares/units for the remaining IPO proceeds held in trust.

Stock symbols include:

Founder Shares represent 20% of total shares and consist of Series A common stock.

The SPAC sponsor also purchased 11.85 million warrants at $1.00 per warrant in a private placement. Each Warrant will entitle the Limited Partner to purchase one Class A common share at $1.00 per share.

The conditions for the SPAC to effect an initial business combination include the requirement to purchase one or more businesses equal to 80% of the net assets of the SPAC and a majority of the votes voting for the proposed business combination.

SPAC may issue additional shares/units to effect a proposed merger. If so, the Class B shares would then be increased to retain the 20% equity stake of the sponsor.

Commentary on Atlantic II

The SPAC is interesting because it is the second of the founders to target tech and mobility spaces.

Leaders have experience in industries but have not created value in the SPAC market.

In fact, their former SPAC (ACAHU) units are now trading at less than face value.

Notably, this first SPAC was also focused on the “next-gen mobility sector” and instead unsuccessfully attempted to merge with a 3D printing company, decidedly not a mobility company.

Investing in a SPAC prior to the announcement of a proposed business combination is essentially investing in the senior management of the SPAC, their ability to create value and their previous track record of performance for SPAC shareholders.

So, in a sense, investing in a SPAC can be likened to investing in a venture capital firm as a limited partner.

In the case of this particular management group, there is little SPAC track record, with the only other SPAC having recently broken with its target.

While PSPC’s leadership teams generally allow themselves wide latitude to merge with a company from any industry, this leadership group’s minimal track record and previous example of merging with a company outside of its industry domain. ‘declared intervention, constitute a question mark in my opinion.

Given the team’s lack of successful experience in SPACs, my view of CABO is a short-term expectation.

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