And why not every SPAC is a dog
The Rover is going private in a $2.3 billion, all-cash sale to Blackstone, the company announced earlier this week. The company focused on pet care was developed hundreds of millions of dollars while private, through a Series G, and later went public through a SPAC. In particular, unlike many SPAC combinations, Rover proves that blank check companies are not just a way to burn wealth.
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The former startup has a 30-day buyout provision built into its deal with Blackstone, meaning other offers may come to the fore. However, with the private equity group paying a hefty premium for Rover shares — 61% more than the company’s 90-day volume-weighted average share price, per circulation — that doesn’t sound very likely.
The Rover deal is expensive, but it has some notable caveats that tell us a lot about the state of the market for tech and technology companies. I bet you didn’t expect a pet-focused e-commerce market to earn an 8.7x revenue multiple in 2023!
This morning I want to dig into why I think Blackstone is paying so much for Rover, what we can learn from this research about other startups, and why some select SPAC’d public companies that are trading like literal dogs might be opportunities for the right buyer.
This price is not unreasonable
Rover and Blackstone announced their transaction after we got the first one company results 3rd quarter 2023which means we have quite up-to-date data on its recent performance.
Rover reported third-quarter revenue of $66.2 million, up 30 percent from the same period a year ago. The company also turned to GAAP net income and told investors it intended to buy back more of its own stock. also hit guidance in the quarter.
