Navitas Semiconductor announced on Friday that it will merge with the Special Purpose Acquisition Company (SPAC). Live Oak Acquisition Corp II (NYSE: LOKB) go public.
The deal values Navitas at a post-money equity value of $ 1.4 billion. The company is working to develop a new type of semiconductor technology that it hopes can revolutionize the chip industry.
Here’s what SPAC investors need to know.
What Navitas does
Navitas is working on integrated power circuits (ICs) based on gallium nitride (GaN), which it believes can enable massive technological improvements compared to conventional silicon-based chips. According to Navitas, GaN technology can run 20 times faster and deliver 3 times more power or 3 times faster charging in half the size and weight.
GaN holds particular promise in industries where energy efficiency is critical, such as: B. mobile devices or electric vehicles. In addition, GaN ICs can achieve cost savings of around 20% on average.
According to Navitas, the company has already overcome many key challenges in commercializing GaN, such as: B. historically low manufacturing yields, poor reliability, overly complex component designs and high costs. According to Navitas, the chip market is nearing a major tipping point where GaN is about to mass-market as costs fall and become competitive with silicon.
The company estimates its total market opportunity is $ 13.1 billion when key end markets such as smartphones, EV inverters, 5G base stations and data center servers are considered. Navitas is optimistic that GaN ICs will eventually displace “a considerable part” of today’s market-dominating silicon-based ICs.
Sales in 2020 were $ 12 million, and sales in 2021 are projected to increase to $ 27 million. Despite recent concerns that the SEC is cracking down on overly ambitious forward-looking projections, Navitas suggests sales could soar to $ 640 million in 2026.
How the deal is structured
The merger with Live Oak Acquisition Corp II will generate gross proceeds of approximately $ 400 million with minimal redemptions from SPAC’s public shareholders. Live Oak II has approximately $ 253 million in escrow in cash, and the SPAC has raised $ 145 million in additional funding from private investment in public equity (PIPE) investors. According to Live Oak II, the PIPE was oversubscribed and met with great interest from institutional investors.
The transaction assigns Navitas a post-money equity value of $ 1.4 billion and an enterprise value of just over $ 1 billion. All existing Navitas shareholders will transfer their equity to the new company. SPAC shareholders will end up owning 18.1% of the combined company, while PIPE investors will acquire a 10.4% stake. The SPAC sponsors have secured a position of 3.5%, while the existing shareholders will represent the remaining 67.9%.
The merger is expected to close in the third quarter, and Navitas has not yet designed a new ticker symbol.
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