Blank check company to lift F45 onto the NASDAQ

Blank check company to lift F45 onto the NASDAQ

A US-based blank check company will take Australia's F45 onto the NASDAQ following the completion of a merger, enabling the fitness company to continue on its international expansion path.

F45 will be acquired by Crescent Acquisition Corp (NASDAQ: CRSA), a listed acquisition vehicle created by Crescent Capital Group in March last year.

Blank check companies are created expressly to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganisation or similar business combination with one or more businesses. 

When US Securities and Exchange Commission filings were submitted by Crescent Acquisition Corp in February 2019, the company raised USD$250 million without any clear takeover target stated.

More than one year later, and following an investor presentation from F45, the Australian fitness franchisor has been selected as Crescent Acquisition Corp's target, giving the merged entity an enterprise value of USD$845 million (AUD$1.2 billion).

F45, which runs on a franchise model in over 50 countries, had filed for its own IPO earlier this year but now appears to be taking a different tack in its bid to grow internationally.

According to Crescent Acquisition Corp executive chairman Robert Beyer and CEO Todd Purdy, F45 was selected because of its successful franchise business model.

"We are looking forward to deepening our relationship with Adam and the entire F45 team as they continue to build what is undoubtedly one of the most exciting growth stories in health and fitness," Beyer and Purdy said.

"F45's high profit margins, exceptional franchisee economics and repeatable business model position it for continued rapid expansion.

"We are confident that F45's strong member loyalty and consistently innovative and differentiated workouts will continue to prevail in many new and existing markets around the world."

The news comes just three days after the founder F45 stepped down from the business.

As reported by the Sydney Morning Herald F45 founder Rob Deutsch posted on Instagram that he has left his role as chief executive but will remain a shareholder.

Deutsch passed on his best wishes to CEO Adam Gilchrist, who was brought into the business in 2013 to drive expansion.

"The F45 future is bright, and I look forward to watching from afar," Deutsch said on his since-deleted Instagram account.

"I look to the future with optimism and wish all friends, family, and franchisees a safe journey through this challenging time. I have a sneaking suspicion we will meet again soon in the wellness space."

Once the transaction is completed, which is expected to happen in the third quarter of 2020, the combined company will retain the F45 Training Holdings Inc. name.

The new entity will be capitalised by cash from Crescent Acquisition Corp's trust totalling over USD$250 million, raised when the blank check company was established in 2019.

Crescent will fund the acquisition with a combination of stock and cash, and existing F45 shareholders are expected to be issued approximately 53.3 million shares in the combined company and paid up to USD$204 million in cash consideration.

Once finalised current F45 shareholders, including American actor Mark Wahlberg, will hold approximately 60 per cent of the combined company.

"As a public company, I am confident that we will be able to accelerate our mission, while creating value for our shareholders," says F45 CEO Adam Gilchrist.

"We look forward to continuing to disrupt our industry and to inspire even more people to achieve their health and fitness goals through F45's innovative workouts combined with our nutrition program."

Post-transaction F45 will continue to be led by CEO Adam Gilchrist, along with CFO Chris Payne and COO Heather Christie.

Its board of directors will include the current members of the F45 board and Crescent Acquisition Corp's sponsor will name two individuals to serve as directors.

In 2019, Mark Wahlberg and FOD Capital LLC, a family office fund managed by Michael Raymond, led a private equity investment in F45 through MWIG LLC, a private investment vehicle. The MWIG group will retain its board representation after the close of this transaction.

F45 first launched in Paddington, Sydney in 2012, and has since expanded to more than 1,900 franchises sold in over 50 countries, and more than 1,200 studios open in 40 countries including the United States, Australia, Canada and the United Kingdom.

The company is best known for its 45-minute workouts merging high-intensity interval training, circuit training, and functional training into one group exercise for its members.

Since the announcement was made shares in Crescent Acquisition Corp have dived by 7.30 per cent to $10.54 per share.

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