Baby Monitor Maker Owlet to Go Public Via Sandbridge SPAC

(Bloomberg) -- Baby monitor maker Owlet Baby Care Inc. said it was going public through a merger with a blank-check company backed by private equity firm Sandbridge Capital.

Lehi, Utah-based Owlet and Sandbridge Acquisition Corp. will have a combined value of $1.1 billion including debt after the deal is completed, according to a joint statement Tuesday that confirmed an earlier Bloomberg News report.

The combined company also raised $130 million in a private placement to support the transaction. Investors in the private placement include Fidelity Management & Research Co., Janus Henderson Group Plc, Neuberger Berman, OrbiMed Advisors, plus private funds affiliated with Pimco and Wasatch Global Investors.

Ken Suslow, the chairman and chief executive officer of the special purpose acquisition company, and Domenico De Sole, the chairman of menswear brand Tom Ford, will join the board after the merger.

Founded in 2013, Owlet makes cameras and monitors that help parents track their infant’s breathing, heart rate and sleep time, among other features. It also offer a sleep-training app, and is planning to launch a product aimed at pregnant women, its website shows.

Owlet’s owners, Eclipse Ventures and Trilogy Equity Partners, will roll their stake in the company.

More dealmaking could be in the works for Owlet, its chief executive officer said in an interview.

“We intend to consolidate this market,” Owlet CEO Kurt Workman said. “We are working in the area of the connected nursery, software subscription content around parenting, and then expanding our capabilities in health care.”

Sandbridge Acquisition raised $230 million in September through an initial public offering. Units in the SPAC fell 2.1% to $10.37 Tuesday in New York trading.

The special purpose acquisition company was started by Sandbridge Capital, a consumer-focused private equity firm with past investments in companies such as fitness company Hydrow Inc., outerwear-maker Rossignol and fashion marketplaces that are now publicly traded including the RealReal Inc. and Farfetch Ltd.

Sandbridge’s Suslow said the SPAC was attracted to Owlet’s core business, which he said was growing more than 50% a year with high margins in hardware. Plus, it has a strong brand equity with its customers and a high barrier of entry, he added.

“It’s got this great emotional connection with its consumer,” Suslow said, “which for us is gold, candidly.”

Suslow said that the deal has a feature where the sponsors won’t earn 50% of the promote fees until the public investors in the SPAC make money. Promote fees are the stock payouts that SPAC sponsors receive in exchange for finding deals.

There’s also an 18-month period where Sandbridge, Owlet’s management and its existing investors can’t sell shares.

Bank of America Corp. advised Owlet and Citigroup Inc. advised Sandbridge.

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