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.
“In a lot of ways, it's akin to a private equity fund,” Barkley said. “It's a management team looking for deals. Here, they've got the benefit of having this liquid security” sitting in an escrow account. The money Granahan McCourt raised in its IPO has grown to $93.97 million while sitting in escrow, some of which has been set aside to pay underwriters' fees.
Like most SPACs, Granahan McCourt had a self-imposed deadline to find a company to acquire, and Granahan McCourt nearly didn't find Pro Brand in time. Granahan McCourt must close on its deal by Oct. 24 or else the company will be liquidated and the investors who acquired Granahan McCourt's common stock and warrants will get their money back, according to the Granahan McCourt-Pro Brand proxy statement.
Barkley said that although he expects to receive extensive comments from the regulators at the Securities and Exchange Commission who are reviewing the Granahan McCourt-Pro Brand proxy statement, he expects the deal should close in time to meet the Oct. 24 deadline. Kilpatrick's legal team must review and respond to the SEC's comments, as will the legal team from Debevoise & Plimpton who represents Granahan McCourt.
The agreement also must receive approval from Granahan McCourt's shareholders, another facet of the transaction that gives it more credibility than the SPAC deals of old, Barkley said. Granahan McCourt must obtain the approval of at least 80 percent of its shareholders to close the deal.
“In old SPACs, the SPAC's shareholders didn't get to vote on the deal,” Barkley said.
If and when the deal receives shareholder approval, Granahan McCourt will change its name to Pro Brand International and assume all of the company's operations. According to its proxy statement, Granahan McCourt will retain some of Pro Brand's current management team, including Chief Executive Philip Shou and President Gen Chu Shou.
As SPACs have entered the mainstream, they've garnered attention from name-brand Wall Street investment banks. Citigroup, J.P. Morgan Securities and UBS, for example, are providing investment advice on a deal announced this week—Complete Energy Holdings' $1.3 billion sale to a SPAC called GSC Acquisition Co.
SPACs comprised 18 percent of all IPOs in the U.S. in 2007, up from 7 percent in the previous year, according to Dealogic.
In addition to Barkley, partners Michael J. Delaney, Jennifer S. Schumacher and Lynn E. Fowler and associate Emily R. Stuart worked on the deal. The Kilpatrick team worked with Pro Brand GC Stanton J. Singleton Jr.