Ticketmaster Rival Vivid Seats Set to Go Public via SPAC

As COVID vaccine distribution accelerates in the U.S., pent-up demand for live events is expected to drive a strong rebound in that industry. People are itching to see their favorite sports teams and musical artists.

Against that backdrop, ticketing platform Vivid Seats plans to announced go public by merging with Horizon Acquisition (NYSE: HZAC), a special purpose acquisition company (SPAC). Here’s what you need to know.

What does Vivid Seats do?

Vivid Seats operates a marketplace for users to buy and sell tickets to live events such as concerts, sporting events, and theatrical performances. The full-service marketplace has more than 12 million customers and competes with industry leader Live Nation (NYSE: LYV) and its Ticketmaster platform.

As of 2019 (before the pandemic), there were more than 3,400 active sellers and 200,000 listed events on Vivid Seats. The company generated $2.3 billion in gross order value (GOV) that year, translating into $469 million in net revenue. Vivid Seats estimates that its total addressable market was $39 billion in 2019, and the company thinks it is positioned well for the live event industry’s recovery.

It’s not just consumers who are eager to get back to live events. Vivid Seats notes that performers are also ready to hit the road again, as tours represent a meaningful portion of many artists’ overall income.

How Vivid Seats adapted to COVID

Vivid Seats responded quickly to the public health crisis last year, reducing total expenses by 80% in the second half of 2020 in order to survive as GOV fell 94%. The company also adopted customer-friendly refund policies, which Vivid Seats says helped strengthen its brand. 

GOV declined to $347 million in 2020 but is expected to bounce back to $781 million this year before continuing to climb to $3.1 billion in 2024. Vivid Seats is forecasting net revenue of $591 million in 2024, which should result in adjusted EBITDA of $189 million and free cash flow of $205 million that year.

The transaction structure with Horizon Acquisition

The merger will give Vivid Seats a post-money valuation of nearly $2 billion. The transaction will provide gross proceeds of around $769 million, consisting of $544 million in Horizon Acquisition’s trust as well as $225 million in PIPE (private investment in public equity) financing.

Prominent institutional investors participating in the PIPE include Fidelity and Eldridge Industries. Horizon Acquisition’s CEO is Todd Boehly, who also serves as the CEO of Eldridge. In order to provide an additional backstop for the deal, Eldridge has committed to invest $10 per share to offset any possible redemptions by shareholders.

Generally speaking, SPACs allow public investors to redeem their shares for the $10 net asset value (NAV), which is a mechanism to give investors a way out if they are displeased once the SPAC announces a target company. 

Vivid Seats intends to use the proceeds to pay down debt and optimize its capital structure.

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