Oct 5 (Reuters) - Danimer Scientific has agreed to go public by merging with blank-check acquisition company Live Oak Acquisition Corp, in a deal that values the U.S. bioplastics company at around $890 million, according to people familiar with the matter.
It is the latest example of a company opting to go public by merging with a so-called special purpose acquisition company (SPAC), rather than through a traditional initial public offering (IPO).
A wave of companies, including sports betting platform DraftKings Inc and U.S. healthcare-services company MultiPlan Inc, have agreed to deals with SPACs to go public this year.
A SPAC is a shell company which raises cash in an IPO with the goal of buying an unidentified private company, usually within two years. It can offer a privately held company immediate certainty on the valuation it will achieve when it goes public, as opposed to punting on a traditional IPO. The downside often is the compensation of SPAC executives, who can request to receive significant stakes in the combined company for themselves.
For Bainbridge, Georgia-based Danimer, the deal with Live Oak will give it funding to continue its plans to expand capacity which were stunted earlier this year by the COVID-19 pandemic.
Danimer sells renewable and sustainable biopolymers which are biodegradable and compostable, a greener alternative to traditional plastic products.
The global biopolymer market is seen exceeding $13 billion by 2021, according to data from Transparency Market Research.
Live Oak raised $200 million in May 2020 through an IPO on the New York Stock Exchange.
Danimer will continue to be led by Chief Executive Stephen Croskrey.
Reporting by Joshua Franklin in New York; Editing by Lisa Shumaker