USA. FORM Holdings Corporation, an investor that specialises in acquiring and developing small to mid-market companies, has agreed to acquire 100% of XpresSpa, the leading airport spa business. The transaction will be funded with common and preferred equity and warrants in FORM Holdings.
XpresSpa provides air travellers with health and wellness services, as well as a branded line of travel products and accessories at its 51 locations across 21 major airports (principally in North America). In 2016, XpresSpa is expected to generate over US$40 million of revenue and around 20% store level margin contribution. XpresSpa will open several new locations through the remainder of 2016 and early 2017, and anticipates increasing its number of total spa locations from 51 to more than 100 in the next few years.
Mistral Equity Partners, the majority shareholder of XpresSpa, and other existing XpresSpa holders, will participate in a private placement into FORM Holdings common stock of US$1.73 million, at US$2.31 per share, which FORM Holdings will then invest in XpresSpa.
XpresSpa equity holders will receive 2.5 million shares of common stock in FORM Holdings, five-year warrants to purchase 2.5 million shares of FORM Holdings common stock, at an exercise price equal to US$3.00 per share, and US$23.75 million of FORM Holdings’ newly issued convertible preferred stock. The FORM Preferred Stock will be convertible into an aggregate of 3.95 million shares of FORM Common Stock, at a US$6.00 per share conversion price, and each holder of FORM Preferred Stock will be entitled to vote on an as converted basis.
FORM Holdings further noted: “XpresSpa’s indebtedness will remain outstanding following the closing of the transaction. The transaction structure maintains FORM Holdings’ strong liquidity position and provides current XpresSpa equity holders an interest in the continued success of the business and FORM Holdings’ portfolio of assets.”
“XpresSpa’s dominant market share, enormous growth potential and its powerful brand present a compelling value proposition for us, and we are excited to work with CEO Ed Jankowski and his team,” said FORM Holdings CEO Andrew D. Perlman.
“This acquisition fits with our strategy and mission to identify and acquire small to mid-sized companies that would benefit from additional capital, management expertise and the implementation of best practices across various components of their business. We believe that by working closely with these businesses, as well as the flexibility afforded by our holding company structure and access to capital, we will be able to realise value for our shareholders by accelerating XpresSpa’s growth.”
“We’re thrilled to announce this transformative transaction with FORM Holdings,” said XpresSpa CEO Ed Jankowski. “XpresSpa and its more than 750 employees have proudly revolutionised the airport experience for millions of travellers by providing wellness and relaxation offerings. We have experienced and continue to experience significant growth and momentum, and we look forward to leveraging FORM Holdings’ resources to execute on opportunities that will enable us to further grow our business by delivering an exceptional experience to our customers.”
Jankowski is expected to continue to lead the XpresSpa business as CEO after the transaction closes.
Andrew Heyer, CEO of Mistral, is expected to join FORM Holdings’ Board of Directors upon completion of the transaction. Heyer stated: “Spa offerings have become must-haves in the increasingly upscale airport retail space, and XpresSpa is the clear market leader. FORM Holdings’ acquisition presents a unique opportunity for us to continue to participate in and guide XpresSpa’s growth. We believe that FORM Holdings’ acquisition of XpresSpa will create significant value.”
The transaction, which has been approved by FORM Holdings’ and XpresSpa’s respective Board of Directors, is expected to close in the fourth quarter of 2016, subject to closing conditions and approval by the FORM Holdings’ stockholders.
