Social Capital, Virgin Galactic announce transaction details of merger
Social Capital, or SCH, entered into a definitive agreement to combine with Virgin Galactic, or VG, with a combination of stock and cash financing. The merged company will have an anticipated initial enterprise value of $1.5B implying a 2.5x multiple of 2023 projected revenue and a 5.5x multiple of 2023 projected EBITDA as commercial operations are expected to achieve scale. After the completion of the transaction, the majority of the net cash from SCH's trust is expected to be held on VG's balance sheet to fund operations and support continued growth. In connection with the transaction, SCH's founder has agreed to invest an additional $100M at $10.00 per share at completion of the transaction. The selling equity owners of VG will receive $1.3B in total consideration, inclusive of $1B of common stock of the combined company valued at $10.00 per share and up to $300M in cash consideration. Assuming no redemptions by the public shareholders of SCH, current VG shareholders and current holders of SCH will hold approximately 51% and 49% of the combined company, respectively, at closing. The transaction is currently expected to be completed during the second half of 2019, subject to approval by SCH's shareholders and other customary closing conditions. Sir Richard Branson, Founder of VG, said, "Great progress in our test flight program means that we are on track for our beautiful spaceship to begin commercial service. By embarking on this new chapter, at this advanced point in Virgin Galactic's development, we can open space to more investors and in doing so, open space to thousands of new astronauts. We are at the dawn of a new space age, with huge potential to improve and sustain life on Earth. I am delighted that SCH has decided to become such an important part of our amazing journey. They share our dreams and together we will make them reality."