The Foley Trasimene Acquisition SPAC is nearing a deal to take Alight Solutions public. The stock trades on the NYSE under the ticker symbol “WPF.” A transaction could value the business at $7.3 billion. Is WPF stock a good buy before the Alight merger?
The talks to take Alight public through a SPAC deal come after a failed attempt to bring the company to the public market. In 2019, Blackstone planned to take Alight public through a traditional IPO at a valuation of $800 million. However, it scrapped the plan due to unfavorable market conditions.
Alight is an American outsourcing company
Alight Solutions is an American outsourcing company headquartered in Lincolnshire, Ill. The company provides benefits administration and HR services to large companies. Alight operates in around 200 countries and serves more than 30 million people.
Alight was part of insurance broker Aon until 2017 before Blackstone bought it in a $4.8 billion transaction. The company is gearing up to go public at a time when the demand for outsourcing services has spiked. Companies want to cut costs in response to economic disruption amid the COVID-19 pandemic.
Since breaking from Aon, Alight has bought several companies to strengthen its business and better seize the market opportunity. It acquired HR advisory firm Future Knowledge to expand in Australia and New Zealand. Alight also bought Texas-based healthcare technology provider Compass Professional Health Services. In 2019, Alight purchased Hodges-Mace, Carlson Management Consulting, and Workday.
Many investors think that WPF stock could pay off well if the Foley Trasimene Acquisition SPAC succeeds with the Alight merger. WPF stock jumped more than 7 percent on Jan. 22. The stock popped up almost 20 percent in the pre-market session on Jan. 25.
WPF SPAC and sponsors
The WPF SPAC IPO took place in May 2020. The blank-check company sold 90 million shares at a price of $10 apiece and raised $900 million. It didn’t tell IPO investors the specific business it intends to acquire and take public. In regulatory filings, the WPF SPAC said that it would target a business in the financial technology or outsourcing industry, which means Alight Solutions fits the bill.
The WPF SPAC is led by chairman Bill Foley and CEO Richard Massey. SPAC sponsors usually retain at least a 20 percent stake in the blank-check company. They also end up with a significant stake in the combined company. Considering Foley’s track record, many investors are buying WPF stock based on the hopes that the Wall Street veteran will strike a merger deal with a good business.
Another Bill Foley SPAC deal with Blackstone
In addition to WPF, another Foley SPAC is Foley Trasimene Acquisition Corp II (BFT), which took payments company Paysafe public in a transaction worth $9 billion in December 2020. Similar to Alight, Paysafe was also backed by Blackstone. Another Foley SPAC was CF Corporation, which combined with Fidelity & Guaranty Life to form FG Holdings in May 2017.
WPF stock looks like a buy before the Alight merger
The global business process outsourcing industry is on track to reach $405.6 billion in 2027 from $221 billion in 2019. Alight targets a lucrative market, which suggests that WPF stock could generate good returns for investors down the road if the merger deal comes through. Finally, WPF stock still looks cheap considering that it trades close to its IPO price.