(Bloomberg) — A blank-check company led by former New York Yankee Alex Rodriguez became the latest firm to be rocked by investors opting to swap their stock for cash as the industry fizzles.
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Slam Corp., the special-purpose acquisition company formed between Rodriguez’s investment firm A-Rod Corp. and hedge fund Antara Capital LP, said roughly 61% of its 57.5 million shares were redeemed when investors approved a deadline extension for the SPAC to hunt for a deal.
The SPAC, which said it’s seeking targets in the sports, media, entertainment, health and wellness, and consumer technology sectors, could be hamstrung by holding a smaller pool of money. If investors stand by their redemption requests, the SPAC will be left with about $224 million, a steep drop from the $575 million it raised two years ago.
The firm’s talks to merge with Panini SpA were said to collapse in 2021 after the maker of sports cards, stickers and other collectibles lost exclusive licenses related to the National Basketball Association and National Football League, Bloomberg News reported.
The once-hot SPAC industry has continued to crumble as investors yank their money and bail on sponsors searching for deals, while other backers opt to shutter formerly ambitious efforts. In recent months, the likes of SPAC titan Alec Gores and former NFL quarterback-turned activist Colin Kaepernick have shut down operations.
SPACs are known as blank checks because they raise money in IPOs with plans to merge with an unidentified company. They give themselves a short window to buy something or return the cash, and investors can redeem their investment if they don’t like the deal. Management teams can get short extensions to find and close deals, but they have to get shareholder approval and must often pay their investors to do it.
Rampant redemption rates have hindered the industry’s ability to get deals done, with the newly public firms receiving far less money than they initially expected. For firms that have gone public through SPAC mergers this year, the median stock has wiped out more than 45% of its value.
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