Cellebrite Is Going Public In a $2.4 Billion SPAC Deal

Cellebrite is a leading provider of digital intelligence (DI), working with government agencies across federal, state, and local levels to assist law enforcement in conducting criminal investigations.

The company has announced that it will be going public by merging with special purpose acquisition company (SPAC) TWC Tech Holdings II (NASDAQ: TWCT) in a deal that values Cellebrite at $2.4 billion.

Here’s what SPAC investors need to know.

Why Cellebrite Is Going Public

Cellebrite says it has a 99% win rate for DI contracts. The company’s technology helps analyze and interpret data while attempting to preserve privacy. Cellebrite’s research team is composed of former elite operatives from Israeli intelligence. There are approximately 6,700 total customers, which include government agencies as well as enterprise organizations.

The business is built on a DI software platform that facilitates collecting, analyzing, and managing data in order to accelerate investigations. Cellebrite can extract data from a multitude of different digital sources, including smartphones and other computing devices or social media platforms and cloud-based services.

The company is keenly aware that it is handling sensitive information, making privacy extremely important while Cellebrite works to ensure that its tools are used appropriately. Evidence in modern criminal investigations is often digital these days, driven by massive growth in adoption of digital devices. 

Cellebrite estimates that the total addressable market for DI will be over $12 billion in 2023, which is expected to consist of around $4.7 billion in federal spending, $6 billion from state and local governments, and another $1.6 billion from the private sector.

Revenue in 2020 was $195.2 million, with annual recurring revenue (ARR) of $137 million last year. Cellebrite is forecasting sales to grow to $282.8 million in 2022, with ARR reaching $260.8 million.

How Cellebrite’s Merger With TWC Tech Holdings II (TWCT) Is Structured

By merging with TWC Tech Holdings II, the second SPAC from True Wind Capital, Cellebrite will raise up to $480 million in cash proceeds from TWC Tech Holdings II’s trust account. After paying $50 million in transaction fees and expenses, $430 million will find its way to Cellebrite’s balance sheet.

The SPAC has also lined up an additional $300 million PIPE (private investment in public equity) financing, although this money will be used to buy out $300 million of stock from existing shareholders so that cash will not go towards the combined company’s balance sheet. The deal values Cellebrite at a post-money equity value of $2.4 billion. 

The SPAC’s public shareholders will end up owning approximately 20% of the combined company, the PIPE investors will get a 13% stake, and the SPAC sponsors have secured 3% ownership. Existing shareholders will have 65% of the combined company.

The merger is expected to close in the second or third quarter, at which point the ticker symbol will change to “CLBT.”

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