Forest Road Acquisition Corp., a special purpose acquisition company (or SPAC) backed by the eponymous entertainment finance firm with a Hollywood-heavy roster of advisors has found its target, announcing plans to buy digital fitness specialist Beachbody Company and take it public.
The transaction involves a three-way merger between the Forest Road SPAC, Myx Fitness Holdings, an at-home connected fitness platform, and Santa Monica-based Beachbody. The deal values the combined business at $2.9 billion and is expected to add over $420 million of cash to the balance sheet.
This is one of the first high-profile entertainment SPAC-backed acquisitions by an explosion of financial vehicles also called “blank check” companies. Backers, in this case Forest Road, assemble seasoned executives and advisors, create a SPAC, take it public and start looking for an operating company to acquire. Merging with a SPAC is a faster, easier way for a private company to go public.
“When we raised our SPAC, we were determined to find a company with a strong, proven business model and significant growth potential where we could add value from our experience in the creation and monetization of premium content. Beachbody is a perfect fit with those objectives,” said Tom Staggs, former COO & CFO of Disney and Forest Road board member and strategic advisory committee chair.
Beachbody will continue to be led by Carl Daikeler, Beachbody’s co-founder, chairman and CEO Jon Congdon, co-founder of Beachbody and CEO of Openfit. Forest Road’s strategic advisor Kevin Mayer, former CEO of TikTok and top Disney executive, will join the combined company’s board. Beachbody management and shareholders are rolling over 100% of their equity stake and will own approximately 84% of the pro forma business at close.
Openfit brings its own celeb pedigree. In December, it acquired Ladder, a nutritional company founded by LeBron James and Arnold Schwarzenegger, who are now investors.
Upon closing, The Beachbody Company will be the parent company of three premium content and technology-driven businesses: Beachbody On Demand (BOD), Openfit and Myx. The transaction is expected to close in the second quarter of 2021 and the combined company will be listed on the NYSE under a new ticker symbol, BODY.
“Beachbody’s rapid subscriber growth is grounded in the concept of community and accountability with a mission-driven focus that capitalizes on the huge growth in the health and wellness space. The Company’s engagement and retention metrics validate the quality and depth of its content library and direct-to-consumer (DTC) technology capabilities. I see many parallels at Beachbody with the work we did at Disney, where we aggressively accelerated our digital transformation and leveraged our content to build Disney+, ESPN+ and Hulu,” said Mayer.
“I’m excited to join the board to help further fuel growth and value creation for the company and its shareholders,” Mayer said. In prepared remarks on a brief call, he noted the boom and opportunity in the fitness space and anticipated the company’s revenue would rise from an estimated $1.1 billion in 2021 to over $3 billion by 2025.
Forest Road announced the SPAC in October and went public in November. SPACS have up to two years to identify takeover targets.
The Forest Road team includes three former Disney senior executives — Staggs, Mayer and Salil Mehta, its chief financial officer. Other directors, officers and strategic advisors include Shaquille O’Neal, Peter Schlessel, Keith Horn, Sheila Stamps, Teresa Miles Walsh and Martin Luther King III.
SPACs can target any sector and media/entertainment has its fair share.
Bright Lights Acquisition Corp, a SPAC run by former Dick Clark Prods. CEO Mike Mahan and co-chairmen of the board Allen Shapiro and John Howard, began trading in January. Its board also includes singer-songwriter Ciara Wilson, Mandalay Entertainment Group chairman and CEO Peter Guber and Endeavor president Mark Shapiro. It’s looking for a company in the consumer products, media, entertainment or sports space valued at $500 million to $1.5 billion, which is ready to scale up and go public.
Thrillist and PopSugar parent group Nine Media has launched a SPAC to pursue digital deals.
John Malone has created the Liberty Media Acquisition Corporation SPAC.
Media and entertainment execs Harry Sloane and Jeff Sagansky have launched a series of SPACs in recent years including the Diamond Eagle and Flying Eagle Acquisition Corps. Flying Eagle acquired mobile gaming platform Skillz and will be taking it public. Diamond Eagle merged with DraftKings, creating the only pure-play sports betting company. Playboy will be going public again after merging with the Mountain Crest Acquisition Corp. SPAC. And Gerry Cardinale’s RedBird Capital is launching a SPAC called RedBall Acquisition to target sports media properties including data analytics companies or possibly a sports franchise.
CEO and former Hearst executive Joanna Coles is looking for acquisitions with her SPAC, Northern Star Acquisition Corp.
Politicians have moved into the space. Former House Speaker Paul Ryan is chairman of an SPAC he created called Executive Network Partnering Corp. Earlier this month, former Secretary of Commerce Wilbur Ross created his own SPAC, Ross Acquisition Corp. II, with Larry Kudlow on the board.