The shareholders of a special-purpose acquisition company (SPAC) have rejected a proposed acquisition of Archway Marketing Services Inc., a marketing company owned by an Atlanta private equity fund.

Union Street Acquisition Corp. announced Monday evening that its shareholders rejected a plan to buy Archway for $80.3 million; Union Street shareholders also voted down the proposed acquisition of Razor Business Strategy Consultants LLC in a separate transaction.

Archway is owned by AHL Services Inc. AHL’s primary investor is Cravey, Green & Wahlen, an Atlanta private equity fund. Alston & Bird partner Teri McMahon had been advising Cravey, Green & Wahlen on the proposed sale of Archway.

Union Street said in a regulatory filing that, as a result of the vote, it will begin the “process of liquidating and dissolving itself in accordance with its charter and applicable law. … As a result, [Union Street] expects that the amounts held in its trust account, together with interest … will be returned to the Company’s public stockholders.”

The shareholders of a Virginia special-purpose acquisition company are voting today on whether to approve the purchase of a subsidiary company of a longtime Alston & Bird private-equity client.

In February, Union Street Acquisition Corp. announced it had reached an agreement to acquire Archway Marketing Services Inc. for $80.3 million in cash. Archway is owned by AHL Services Inc. AHL’s primary investor is the Atlanta private equity fund Cravey, Green & Wahlen.

Alston partner Teri McMahon in Atlanta is advising Cravey, Green & Wahlen on the Archway deal. Mintz Levin Cohn Ferris Glovsky and Popeo partner Kenneth Koch in New York is advising Union Street.

McMahon declined to comment on the Archway acquisition agreement or on the pending shareholder vote. As of Monday afternoon, neither Union Street nor AHL Services had announced the results of the shareholders’ vote.

Archway sells outsourced marketing services, such as program budgeting, vendor management, sales portals, inventory management, fulfillment and distribution, customer care and analytics.

Union Street is a special-purpose acquisition company, also known as a SPAC, that’s headquartered in Alexandria, Va. A SPAC is a shell company that sells common stock to the public for the sole purpose of using the proceeds to acquire another company.

Atlanta company Hughes Telematics Inc. took legal advice from Skadden, Arps, Slate, Meagher & Flom partner Gregory Fernicola in New York on its acquisition by a special purpose acquisition company (SPAC). Hughes Telematics is controlled by the giant New York private-equity fund Apollo Management LP.

Hughes Telematics makes computer systems for automobiles that integrate MP3 players, GPS modules, e-mail and roadside-assistance information. The company has contracts with Chrysler and Mercedes-Benz. Apollo’s portfolio includes AMC Theatres, Harrah’s Entertainment, Linens ‘n Things and Norwegian Cruise Line.

The SPAC, Polaris Acquisition Corp., will acquire Hughes Telematics for $700 million in stock. Polaris raised $150 million in its January IPO and plans to issue more shares to pay for Hughes Telematics. Wachtell, Lipton, Rosen & Katz is advising Polaris.

SPACs have come a long way. Once a backwater of the M&A world, special-purpose acquisition company deals are increasingly popular, and SPAC deal values can reach into the hundreds of millions, if not billions.

One of the latest SPAC deals was handled by Kilpatrick Stockton partner W. Benjamin Barkley. The lawyer was counsel to Pro Brand International Inc. of Marietta, which designs and makes dishes and antennas for direct-broadcast satellite provider DIRECTV Group Inc. Pro Brand has agreed to be acquired by a SPAC, Granahan McCourt Acquisition Corp., for $75 million.

Pro Brand's deal is part of the new wave of SPAC transactions, which have grown in popularity during the current bear market, while the traditional IPO market is essentially moribund, Barkley said.

“This is not like the old reverse mergers where it's the selling company buying a SPAC, which was just a publicly traded shell company,” Barkley said. “Here, you have the publicly traded SPAC buying the target company.”

Granahan McCourt was formed specifically for that reason—to acquire telecommunications or media companies like Pro Brand. Headed by David C. McCourt, a veteran telecom-industry executive, the Hopewell, N.J.-based SPAC was taken public in July 2006 by Deutsche Bank Securities, raising about $87 million. Since that time, the money has sat in an escrow account while McCourt and his partners scoured the landscape for deals. More...