A SPAC deal to take Vancouver, Wash.-based industrial headset company RealWear public has fallen apart.
Cascadia Acquisition Corp., the special purpose acquisition company led by Seattle investment firm Cascadia Capital, announced Tuesday that the deal was terminated “in accordance with the terms of the agreement.”
The deal, announced in February, valued the new combined company at $375.5 million.
Also known as blank check companies, SPACs re-emerged in a big way during the pandemic as capital flowed to newly formed entities and entrepreneurs used the financial instruments to more quickly enter the public markets.
But the performance of post-merger SPACs steadily dropped throughout 2022 amid the larger market slowdown and a record number of deals were spiked. There were 613 SPAC deals in 2021; just 11 have been completed this year, according to SPAC Insider.
Cascadia nor RealWear will be required to pay a termination fee, according to Tuesday’s announcement. The merger was expected to close in the second half of 2023.
RealWear Chairman and CEO Andrew Chrostowski said the company “has a strong plan forward” and is looking at other potential funding strategies.
“That said, due to current market conditions, we will no longer be pursuing the specific business combination agreement with Cascadia Acquisition Corp. (CCAI),” he said in a statement to GeekWire.
Cascadia said last month that 14.7 million shares worth $148.7 million were redeemed following the agreement with RealWear, which required the company to find third party financing to meet minimum cash requirements. SPAC investors can redeem shares if they disapprove of the business combination and for other reasons.
The merger agreement allowed RealWear to back out if, as of April 6, “the aggregate value of our Public Shares committed to be held in trust through the Closing (based on the per-share amount held in our Trust Account) and the aggregate proceeds to be paid in connection with any committed financing transactions do not equal at least $25,000,000,” Cascadia said in its annual report.
Cascadia set a new deadline of August 31 of this year to complete a merger if the RealWear deal fell apart.
The firm previously said it was targeting a company in the robotics and AI space, and had set a February 2023 deadline to get a deal done.
RealWear sells ruggedized head-mounted voice-controlled devices that project a virtual Android tablet just below line of sight. Industrial workers use the product to do remote video calling, document navigation, guided workflow, mobile forms, and data visualization, among other tasks. The company recently launched an accompanying RealWear Cloud Platform to manage devices and data.
The company reported $20.5 million in 2022 revenue, up from $13.9 million in 2019, according to an investor presentation. It counts 41 of the Fortune 100 as clients and has deployed more than 70,000 units.
Chrostowski is the former president of Scott Safety who held exec roles at UTC Aerospace Systems, Goodrich, Energizer, Pfizer, and Hitachi.
Cascadia’s Jamie Boyd led the firm’s SPAC as CEO. In addition to Boyd and Cascadia Chairman Michael Butler, directors of Cascadia Acquisition Corp. include Edgar Lee, a former executive at Oaktree Capital Management; Scott Prince, CEO of APS Logistics Holdco; and Arun Venkatadri, a senior product manager at Aurora who previously worked at Uber and Lyft and founded Extremis Ventures.
Updated after publication with comment from RealWear.
