HyperloopTT Agrees to Merge With Ex-Disney Executives’ SPAC

(Bloomberg) -- Hyperloop Transportation Technologies, a technology-licensing company, has agreed to merge with Forest Road Acquisition Corp. II, a blank-check firm, according to people with knowledge of the matter.

A transaction is poised to be announced as soon as Tuesday, and is slated to have an enterprise value of $400 million, though this figure could climb to $565 million if HyperloopTT options and warrants are exercised, said the people, all of whom requested anonymity discussing private information. HyperloopTT doesn’t currently generate revenue, one of the people said, though its technology portfolio features dozens of patents and trademarks that relate to levitation, propulsion and low-pressure tube transportation.

The Forest Road SPAC is led by former Walt Disney Co. executives and co-CEOs Kevin Mayer and Tom Staggs and chief investment officer Jeremy Tarica. It raised $350 million in a March 2021 initial public offering.

Early HyperloopTT backers including Thayer Ventures, EdgeWater Investments, Dar Al-Handasah, Hitachi Rail, Thornton Tomasetti and Lord John Browne are set to become investors in the combined entity, the people said. Collectively, existing HyperloopTT investors will own about 40% of the combined company if there are no redemptions. Should the transaction close, the combined entity is expected to trade under the ticker ‘HYPE’ on the New York Stock Exchange.

Representatives for HyperloopTT and Forest Road declined to comment.

Los Angeles-based HyperloopTT was founded in 2013 following a white paper published by Elon Musk but has no affiliation to the billionaire. The company, led by Andres De Leon, intends to work with governments, infrastructure providers and transportation companies to develop and commercialize Hyperloop technology.

Musk’s Boring Co. said earlier this year that it’s attempting to build its own version of Hyperloop, a high-speed, tube-based transportation system. Its website shows a Hyperloop trip, in pods that travel at more than 600 miles per hour, could result in a Washington, DC, to New York trip lasting fewer than 30 minutes. Another entity, Hyperloop One, has ambitions to build a freight-delivery service. The technology relies upon levitating capsules inside a partial vacuum.

An earlier blank-check firm run by Mayer and Staggs merged with two fitness platforms to form BeachBody Co., which has tumbled more than 90% since the deal closed. Forest Road counts basketball star Shaquille O’Neal and former KKR & Co. executive Harlan Cherniak among its advisers, filings show.

(Corrects company name in first paragraph.)

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Author: Gillian Tan