Dan Loeb Wants to Scrap Global Blue Deal as Virus Hits Luxury Travel
Dan Loeb Wants to Scrap Global Blue Deal as Virus Hits Luxury Travel
(Bloomberg) -- Activist investor Dan Loeb is attempting to scrap a $2.5 billion deal that bet on luxury shoppers’ tax refunds, saying Global Blue SA’s viability is in question as the coronavirus pandemic decimates international travel.
Loeb’s Far Point Acquisition Corp. said Thursday that its January deal to merge with Global Blue is now no longer in shareholders’ interests, and urged investors to vote against the transaction. Global Blue, which is owned by private equity firm Silver Lake, responded that Far Point’s investors would be better off letting the transaction go ahead.
The merger, which included an investment from Chinese tycoon Jack Ma, was a bet on travelers splurging when abroad -- a vision that’s in tatters after the pandemic emptied airliners and shuttered shopping districts. Global Blue, a Swiss company, owns kiosks at airports and stores like London’s Harrods that let shoppers claim sales-tax refunds when they fly home.
“Global Blue management has informed FPAC that the ongoing COVID-19 pandemic is having a significant negative impact,” Far Point said in a statement. Far Point’s management “believes, based on its assessment of information received from Global Blue, that there is a likelihood that Global Blue will lack sufficient capital and liquidity to fund its operations.”
Far Point was started in 2018 by Loeb’s Third Point and former New York Stock Exchange President Thomas Farley as a “blank-check company” to acquire financial technology firms. Farley said in January that the Global Blue deal would be followed by more M&A. Far Point, whose shares are thinly traded, spiked when the deal was announced in January, but since drifted about 20% lower.
Under the terms of the January deal, Global Blue was to receive $1 billion of investment from Far Point and new investors including Ma as part of a deal that would value the Swiss firm at 2.3 billion euros ($2.5 billion) including debt and list it on the New York Stock Exchange. Either side can call off the transaction if it isn’t completed by the end of August.
“We believe that a majority of FPAC shareholders will recognize that the transaction will serve their interests a well as those of Global Blue,” the Swiss company said. “Rejecting the transaction likely will result in a liquidation of FPAC, according to its charter. And warrants would expire worthless in such a liquidation.”
Global Blue argued that Far Point investors would get likely get more cash than they would in a liquidation by letting the deal close and then selling their shares. Far Point “was structured with the backing of substantial financial institutions to ensure that Global Blue would receive the financing it needs even in the event of significant shareholder redemptions,” it said.
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