Shares of the special purpose acquisition company (SPAC) Dragoneer Growth Opportunities (NYSE: DGNR) got off to a volatile start in trading today, after it announced it would merge with CCC Information Services, taking it public. The stock opened the morning about 15% higher before falling sharply. Shares were trading down more than 5% from Tuesday's close as of early Wednesday afternoon.
So what
Often referred to as blank check companies, SPACs go public with the intent of merging with a private company and taking it public. Dragoneer went public in August, raising $690 million in an IPO.
CCC operates a software-as-a-service (SaaS) platform for the property and casualty insurance industry. It uses advanced artificial intelligence, deep tech, customer experience, and other solutions to help insurers make better decisions. CCC powers more than $100 billion in transactions annually.
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Dragoneer will pay CCC $968 million at the closing of the transaction, valuing the company around $7 billion. CCC's management team will stay intact, and all cash proceeds from the transaction will be put toward the company's balance sheet.
In addition to the $690 million from Dragoneer, the deal will also be funded by a $175 million commitment from Dragoneer funds and Michael Bloomberg's family office. A group of SaaS investors have also committed $150 million through a private investment in public equity (PIPE) at $10 per share.
Now what
The boards of both Dragoneer and CCC have approved the proposed transaction, which is expected to close in the second quarter of 2021, subject to approval by Dragoneer's shareholders.