US: It has been revealed that Airbnb turned down the offer of a merger with a blank-cheque / special purpose acquisition company [SPAC] owned by billionaire investor Bill Ackman as it preferred to go down the traditional initial public offering [IPO] route.
Bloomberg reported the news, following the announcement in August that the home-sharing platform had confidentially filed for its long-anticipated IPO.
Previously, as rumours swirled over the direction Airbnb would take to go public, whether in the shape of an IPO or a direct listing, CEO Brian Chesky remained coy so as not to speculate publicly in an interview with Reuters’ Gina Chon and Rob Cox, however Chesky did admit that Airbnb had been approached about a merger with a SPAC.
At the time, he said: “We’ve been approached by some people that have presented us some opportunities. We’re looking at everything so I probably shouldn’t speculate too much on it.”
Mergers with special purpose acquisition companies are seen as a relatively new but increasingly popular way of listing on the stock market. SPACs are shell companies that use the proceeds from IPOs and debt to acquire another company, and have gained traction as a quick-fire route to the stock market within two or so years for firms that are concerned about the length of the IPO process.
Airbnb has not dismissed the prospect of such a merger outright with Pershing Square Tontine Holdings Ltd, owned by Ackman, but no discussions are believed to be currently taking place on the matter.
Pershing Square Tontine is the largest-ever SPAC and raised $4 billion in its own IPO in July. Ackman himself has openly touted Airbnb as a company he would like to work with due to its “economic characteristics”, which would fit the bill of the “mature unicorn” he has been searching for.
Writing in a letter to investors, Ackman revealed that Pershing Square Tontine had $5 billion in capital in its coffers, which includes $1 billion pledged by Pershing Square Capital Management LP.
While Airbnb’s IPO has already been labelled a “watershed” moment for the home-sharing industry by ShortTermRentalz, Ackman believes the timing of a SPAC merger with Airbnb could be advantageous for the company, given the current volatility in equity markets, as well as the uncertainty of who will be the president of the United States [POTUS] from January 2021 onwards as the elections loom.
The firm’s strategy to press ahead with its IPO initially in March was disrupted by the outbreak of the Covid-19 pandemic, which has since seen Airbnb’s private valuation plummet to around $18 billion, lay off a quarter of its global team and raise two rounds of funding in debt and equity securities to survive the devastating fallout on the travel industry worldwide.