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Holley and Special Purpose Acquisition Company Empower Ltd. to Merge

Tuesday, March 16, 2021

Holley (logo) has agreed to merge with Empower LTD (logo), MidOcean Partners (logo)

William Blair acted as the financial advisor to Holley, a portfolio company of Sentinel Capital Partners, in connection with its merger with Empower Ltd. Holley, the largest and fastest growing platform in the performance automotive aftermarket category, and Empower Ltd. (NYSE: EMPW) (Empower), a publicly-traded special purpose acquisition company, announced on March 12th that they have entered into a definitive merger agreement that will result in Holley becoming a publicly listed company on the NYSE under the new ticker symbol HLLY.

Transaction Highlights

  • Deep sector expertise: Holley and Sentinel were attracted to William Blair’s extensive knowledge and experience in the automotive aftermarket sector and ability to market enthusiast consumer focused businesses. This sector expertise allowed the transaction team to guide management through a bespoke and effective marketing process.
  • Unique company insights drove compelling positioning: The transaction team effectively focused SPAC buyers and PIPE investors on Holley’s highly attractive enthusiast consumer base, large and resilient market, new product development capabilities, robust M&A pipeline, and potential within the electronic vehicle segment.
  • Trusted guidance and execution excellence: William Blair’s team worked closely with the Holley and Sentinel teams through every step of the transaction process, providing thoughtful process tactics, tailored strategic guidance, and relevant market insights.
  • Highly successful SPAC outcome: These efforts resulted in an exceptional valuation and outcome for shareholders.

SPAC Transaction Overview

The transaction implies an enterprise valuation for Holley of $1.55 billion, or approximately 10x projected 2021 pro forma adjusted EBITDA of $159 million. Estimated cash proceeds from the transaction are expected to consist of Empower’s $250 million of cash in trust, plus a $50 million forward purchase agreement from MidOcean Fund V. In addition, investors led by Wells Capital Management Inc. and Wasatch Global Investors have committed to invest $240 million in the form of a PIPE at a price of $10.00 per share of common stock of Empower immediately prior to the closing of the transaction.

The company expects to use the proceeds from the transaction to invest in Holley’s growth initiatives, substantially reduce existing debt, support marketing efforts, and provide additional working capital. It is anticipated that the combined company will have approximately $485 million of net debt on its consolidated balance sheet.

About the Companies

Founded in 1903, Holley is a leading designer, marketer, and manufacturer of high performance automotive aftermarket products, featuring the largest portfolio of iconic brands serving car and truck enthusiasts. Holley’s brands are woven into the fabric of car culture around the globe, covering electronic fuel injection (Holley EFI), electronic tuning (APR, Diablo Sport, Edge and Superchips), electronic ignition (MSD and ACCEL), carburetion (Holley), exhaust (Flowmaster and Hooker), safety (Simpson and Stilo) and more. Holley employs an omni-channel go-to-market strategy that reaches enthusiasts wherever they choose to shop, including high-growth direct-to-consumer and e-commerce channels.

Sentinel specializes in buying and building lower midmarket businesses in the United States and Canada in partnership with management. Sentinel targets business services, consumer, healthcare services, and industrial businesses. Sentinel invests in management buyouts, recapitalizations, corporate divestitures, going-private transactions, and structured equity investments of established businesses with EBITDA of up to $80 million. Sentinel also invests in special situations, including balance sheet restructurings and operational turnarounds.

Empower is a blank check company formed by MidOcean Partners whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Empower’s management team is led by Mr. Rubel, its Chief Executive Officer and Executive Chairman of its Board of Directors, and Graham Clempson, Empower’s President. Empower raised $250,000,000 in its initial public offering in October 2020 and is listed on the NYSE under the ticker symbol EMPW.

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