Former Cypress CEO TJ Rodgers Shows Up on Two Sides of SPAC Deal
(Bloomberg) -- A blank-check company founded by T.J. Rodgers, the former chief executive officer of Cypress Semiconductor Corp., is merging with a battery technology company that counts Rodgers as a large shareholder.
Rodgers Silicon Valley Acquisition Corp. said Monday it would merge with Enovix Corp., a maker of lithium-ion batteries, in a deal that is valued at $1.1 billion including debt.
Rodgers has been a director at Enovix since 2012, according to an investor presentation on the deal, and was the company’s largest individual shareholder as of September, an earlier statement showed. Enovix, which was founded in 2007, had raised $239 million before the SPAC deal, including $21 million in total from Rodgers.
Rodgers couldn’t be reached for comment.
Conflicts of interests are showing up in blank-check dealmaking, where investors in a special purpose acquisition company bet on the founder’s ability to gain an edge in finding a lucrative target. SoftBank Group Corp.’s first SPAC filing, for example, states that it’s not prohibited from pursuing a company with which SoftBank is already associated.
Like in any transaction, potential conflicts of interest in SPAC deals must be disclosed to investors, and independent committees are usually set up to address them. Rodgers had recused himself from board discussions on both sides of the Enovix deal and didn’t participate in his SPAC’s board vote on the merger, a filing showed.
SoftBank’s SPAC filing said it would bring in an independent adviser to make sure the deal it chooses is fair.
Rodgers’s deal was one of several where one of the parties involved had connections on both sides.
Alec Gores’s third SPAC, Gores Holdings III Inc., in February 2020 merged with U.S. government contractor PAE Inc. -- a portfolio company of private equity firm Platinum Equity, which counts Gores’ brother Tom as chairman and chief executive officer. The investment bank Moelis & Co. was brought on to provide an independent review.
SPAC pioneer Chamath Palihapitiya was an early investor in insurer Clover Health Investments Corp. through his venture capital firm, according to data provider Pitchbook and a person familiar with the matter. One of his blank-check companies merged with Clover last year, though it’s not clear whether he sold the stake prior to the SPAC deal. A representative for Palihapitiya didn’t respond to requests for comment.
Rodgers, who is known for his outspoken style and leadership in the semiconductor industry, launched a successful board fight against his former company Cypress in 2017. Part of Rodgers’s argument at the time was that Cypress faced conflicts of interest at the board level. Cypress has since been acquired by chipmaker Infineon Technologies AG.
High-profile business executives continue to file for SPACs. Last Friday alone, Michael Dell, activist investor Paul Singer, Facebook Inc. co-founder Eduardo Saverin and former Xerox Corp. chief Ursula Burns all joined the parade with blank-check filings.
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