January 16, 2020 / 11:25 AM / 2 days ago

Far Point to buy tax-free shopping firm Global Blue at $2.6 billion valuation

(Reuters) - Far Point Acquisition Corp (FPAC.N), a blank-check company set up by hedge fund Third Point LLC and ex-New York Stock Exchange President Thomas Farley, said on Thursday it had agreed to acquire shopping tax refund firm Global Blue in a $2.6 billion deal.

It is a bet by Far Point, a so-called special purpose acquisition company (SPAC), on the travel and shopping appetite of the budding wealthy class in emerging markets.

“If you believe that there will be more middle class and upper class coming from emerging markets around the world, this business will grow because those people like to travel and they like to purchase luxury goods,” Farley said in a telephone interview.

Switzerland-based Global Blue relies on international tourists who use its network to purchase luxury goods tax free, and is currently owned by private equity firms Silver Lake and Partners Group.

A SPAC uses proceeds from its initial public offering, together with borrowed funds, to acquire companies that are usually privately held. IPO investors do not know in advance which company a SPAC will buy, though Far Point had said it would target financial technology companies.

Before the Global Blue deal, Far Point had looked at nearly 150 companies, though discussions with Silver Lake about Global Blue date back to the summer of 2018, Farley said.

The deal values Global Blue at $2.6 billion, including debt, and it will list on the NYSE under the symbol “GB”.

Current Global Blue Chief Executive Officer Jacques Stern and Chief Financial Officer Loïc Jenouvrier will continue in their current roles, while Farley will become the chairman of the company.

Global Blue had originally been planning an IPO in Amsterdam but was ultimately decided that a SPAC deal was the best path to the public market.

“It was a better way for us (to go public), more rapid with less risk on the execution and basically made us believe that we should go with Far Point,” Stern said

The transaction, expected to close in the second quarter of 2020, will be funded by $650 million in cash by Far Point and new investors led by Alibaba Group Holding Ltd’s (BABA.N) Ant Financial Services Group.

Third Point will invest $350 million, taking the total amount of investment to $1 billion. Silver Lake and Partners Group will retain 42% of the new entity.

Far Point shares were up 3.1% at $10.90 in early New York trading.

Reporting by C Nivedita in Bengaluru and Joshua Franklin in New York; Editing by Saumyadeb Chakrabarty and Lisa Shumaker

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