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Law360 (May 18, 2020, 10:19 AM EDT) -- Open Lending will still go public, but at a lower valuation, saying Monday in an amended agreement that the new deal would value the lending services business at about $1.08 billion, including debt.
Open Lending LLC will be taken public via a merger with a special-purpose acquisition company, but the terms have changed to reflect the economic impact of the COVID-19 outbreak, according to a statement. Taking into consideration the impact of the coronavirus on the economy and public markets, the companies have decided to reduce the deal's value by 19%, or roughly $25 million, giving Open Lending an enterprise value of about $1.08 billion.
"The parties remain excited about the future prospects of the combined company," the companies said in a press release.
The deal was originally announced in January and reflected an enterprise value of roughly $1.33 billion for Open Lending. Guided by Goodwin Procter LLP and Greenberg Traurig LLP, the agreement sees Open Lending being merged with Nebula Acquisition Corp., a blank check company sponsored by private equity shop True Wind Capital LP. Blank check companies, also called special-purpose acquisition companies, are shell entities formed for the purpose of business combinations with target companies.
Texas-based Open Lending bills itself as a lending services platform for financial institutions, with a particular focus on automotive finance and near-prime consumers, according to its website.
Under the terms of the deal, Nebula will acquire Open Lending through a holding company, which will then become a publicly listed business. The new company is expected to be called Open Lending Corp. and will trade on the Nasdaq stock market.
Open Lending shareholders will be paid in a combination of cash and stock in the newly formed company. Nebula holds cash in trust from a $275 million initial public offering in 2018, and will generate additional cash through a $200 million private placement. Nebula also expects to have access to up to $225 million in institutional debt financing.
The deal is one of several recent go-public deals involving special-purpose acquisition companies. Online gambling site DraftKings Inc. plans to become a public company in the first half of 2020, after inking a three-way merger deal in December with SBTech and Diamond Eagle Acquisition Corp.
Also in December, digital infrastructure company Vertiv Holdings Inc. said it would list on the New York Stock Exchange after merging with GS Acquisition Holdings Corp., a blank check company backed by a Goldman Sachs Group Inc. affiliate and investor David M. Cote.
The Open Lending deal is also one of many recent transactions that have been affected by the coronavirus pandemic. In some cases, deals are getting completely terminated, while other agreements are merely being amended.
Last week, French insurance company Covea pulled the plug on a deal for Bermuda insurer PartnerRe, blaming the unprecedented impact of the COVID-19 outbreak on the insurance market. Earlier this month, meanwhile, BorgWarner Inc. and Delphi Technologies PLC resolved a dispute concerning their own January merger, amending the deal and saying they remain on track to close during the second half of this year.
Open Lending is represented by a Goodwin Procter LLP team including Jared Spitalnick, Jocelyn Arel, Dan Espinoza, Katherine Baudistel and Anitha Anne.
Financial Technology Partners and FTP Securities are acting as Open Lending's strategic and financial advisers.
Nebula is represented by a Greenberg Traurig LLP team led by shareholders Alan I. Annex, Kenneth A. Gerasimovich and Joseph Herz.
Deutsche Bank Securities and Goldman Sachs & Co. LLC are acting as Nebula's capital financial advisers and private placement agents.
UBS Investment bank is acting as sole arranger for the debt financing.
--Additional reporting by Tom Zanki, Elise Hansen, Mike Curley and Lucia Osborne-Crowley. Editing by Rebecca Flanagan.
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