Zell-backed SPAC fizzles

Blank-check firm to return cash to investors

Equity Distribution Acquisition Corp. chairman Sam Zell (Getty)
Equity Distribution Acquisition Corp. chairman Sam Zell (Getty)

The deflated SPAC market has claimed another victim.

The Sam Zell-backed Equity Distribution Acquisition Corp. will close up shop next month after failing to find a merger deal, Bloomberg reported. The special purpose acquisition company will stop trading on Sep. 16 and redeem the outstanding class A shares to investors on Sep. 19.

The firm went public at the height of the SPAC craze in 2020, putting a focus on businesses in the industrial sector. The SPAC described itself as targeting “unique or technology-enabled solutions across the value chain in the industrial and industrial distribution markets.”

But as the SPAC landscape started to die down, Equity couldn’t find a merger deal. Warrants tied to the company plummeted 74 percent to less than a penny, while the derivatives are set to expire as worthless. The company’s stock was trading at $9.97 at the close of business on Tuesday and stayed around there as of Wednesday afternoon.

It’s the latest high-profile loss for Zell, who spent last year in a bidding war with Barry Sternlicht for industrial firm Monmouth Real Estate. Zell’s firm offered $3.4 billion in stock and cash, only to be countered by Sternlicht’s Starwood Capital.

Sign Up for the undefined Newsletter

Ultimately, Monmouth didn’t go with either of the real estate titans and instead agreed to be acquired by ​​Industrial Logistics Properties Trust in a $4 billion all-cash deal.

Read more

Monmouth Real Estate's Mike Landy and Industrial Logistics Properties Trust's John Murray (ACRE, Industrial Logistics Properties Trust)
Commercial
New York
Plan C: Monmouth finds buyer after Zell, Sternlicht offers fall through
From left: Howard Lorber, Spencer Rascoff, Rob Speyer, and Steve Witkoff (Getty, Twitter)
Tech
National
The definitive real estate SPAC tracker
Tech
New York
SEC proposes more transparency for SPACs

SPACs made a major comeback in 2020 as an alternative to the traditional IPO, raising $83 billion over the course of the year, according to SPACInsider. A number of major players filtered into the SPAC business accordingly, including Barry Sternlicht, Howard Lutnick and Alec Gores.

The market started to fall apart at the beginning of this year. The New York Times reported SPACs combined to raise $160 billion in 2021, but only $10 billion in the first quarter of this year.

The Securities and Exchange Commision is further cooling the SPAC frenzy, looking to increase scrutiny on the companies. The SEC has proposed requiring SPACs to provide more investor disclosures with information on ownership, along with performance forecasts. The commission also proposed having some SPACs register as investment companies, subjecting them to stricter rules.

— Holden Walter-Warner