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Monday, Feb 6, 2023

Gores Completes SPAC Deal Valued at $2.2 Billion

A special purpose acquisition company backed by billionaire Alec Gores and investment partner Dean Metropoulos will take short-term lodging startup Sonder Holdings Inc. public.

The combined company is valued at $2.2 billion and will have $700 million in cash on hand when the deal closes in the second half of 2021.

The Gores Metropoulos II Inc. transaction will include a private placement of $200 million from investors Fidelity Management & Research Co., as well as funds and accounts managed by BlackRock Inc. and Senator Investment Group.

The SPAC raised about raised $450 million through an initial public offering in January.

San Francisco-based Sonder, which offers refurbished properties for short-term rentals, works with real estate developers who build properties Sonder operates under its name.

“With its enormous market opportunity and experienced leadership team, Sonder has already proven the resiliency and scalability of its business and has tremendous potential to continue expanding globally amid tailwinds created by the impending travel recovery,” Gores said in a statement.

Gores, chairman and chief executive of The Gores Group, did his first SPAC in 2015. He has created 13 SPACs to date — more than anyone else on Wall Street — and closed eight of the 13 deals with transaction values totaling more than $38 billion.
His Beverly Hills-based private equity firm raised a combined $1.1 billion on three SPACs in March alone.

Gores also closed the largest SPAC transaction to date with a combination of Pontiac, Mich.-based United Wholesale Mortgage and Gores Holdings IV Inc. The January merger had a valuation of about $16 billion.

Sonder expects to achieve about $4 billion of revenue by 2025 and believes its technology-driven service model can reduce operating costs by half compared with traditional hotels.

Chief Executive and co-founder Francis Davidson came up with the idea for Sonder while managing apartments for short-term stays as a university student in Montreal.
Sonder, which has collected more than $560 million in investor funding since it launched in 2014, partners with companies including Airbnb Inc., Booking.com and Expedia Group Inc., to reach customers.

The company has 4,500-plus listings in 30 cities in eight countries. Sonder estimates that it attracts more than 1 million guests annually for its 300-plus properties.

SPACs are essentially a corporate shell through which investor money is raised via a public offering.

Shares in the companies tend to trade around their IPO prices, at least until there’s some movement to purchase a company and take it public. A SPAC has anywhere from 18 months to two years to do an acquisition with a private company.

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