Alight Solutions, a business process outsourcing company, is gearing up to go public through a reverse merger with Foley Trasimene Acquisition Corp. (WPF). The WPF SPAC raised about $900 million in a May 2020 IPO. When is the WPF and Alight merger date? Should you buy the SPAC stock now?
WPF SPAC stock is up 1.3 percent from its IPO price of $10 per share. However, the stock is still down 30.2 percent from its 52-week high. On April 7 as of 10:27 a.m. ET, the stock is up 0.3 percent at $10.13.
Who owns WPF SPAC?
In its May 2020 IPO, the WPF SPAC offered 90 million shares for $10 each. The blank-check company is backed by billionaire investor Bill Foley. Foley has taken online payments company Paysafe public through a reverse merger with Foley Trasimene Acquisition II Corp.
WPF and Alight merger details
The WPF and Alight merger transaction is expected to close in the second quarter of 2021. The deal, subject to approval by WPF stockholders and other customary closing conditions, is set to have a pro forma enterprise value of $7.3 billion. The combined entity will be listed on the NYSE under the ticker symbol “ALIT.”
The deal will provide Alight with nearly $2.9 million in cash proceeds to fund growth initiatives. The amount includes about $1 billion in cash held by WPF in trust and $1.6 billion in PIPE. After the transaction closes, WPF SPAC investors will own 19.2 percent of Alight. PIPE investors, which include Hedosophia, Suvretta Capital, and Third Point, will own 28.8 percent.
WPF valued Alight at a pro forma implied equity value of $5.39 billion. Meanwhile, at WPF’s current stock price, Alight is valued at around $5.46 billion. After adjusting for its pro forma total debt of $2.3 billion and $360 million net cash, it would have a pro forma enterprise value of $7.4 billion. Based on this enterprise value and Alight’s projected sales, its valuation multiples come at 2.7x (2021 sales), 2.5x (2022 sales), and 2.3x (2023 sales), respectively.
WPF stock is a good buy before the Alight merger.
Alight expects to generate sales of $2.8 billion in 2021 and it thinks it will grow to $2.9 billion in 2022 and $3.2 billion in 2023. The company expects to report an adjusted EBITDA and free cash flow of $600 million and $465 million in 2021 and $768 million and $607 million in 2023, respectively. The adjusted EBITDA margin of 24 percent in 2023 also looks good.
The WPF SPAC stock looks like a good buy based on Alight’s attractive valuations and robust growth outlook. The global business process outsourcing market is on track to hit $405.6 billion in 2027 compared to $221 billion in 2019. Alight targets a lucrative market, which suggests that WPF stock could generate solid returns for investors if the merger transaction closes.