Shares of special purpose acquisition company (SPAC) Forest Road Acquisition (FRX) soared over 40% on Friday morning before settling to a gain of 25% as of 11:55 a.m. EST. The SPAC announced earlier this month that it was planning a three-way merger with the Beachbody Company and MYX Fitness.
Today's news surrounds a filing for an initial public offering to raise $300 million and create Forest Road Acquisition II. Forest Road is led by former Walt Disney (DIS -0.70%) executives Tom Staggs and Kevin Mayer. Other well-known names associated with the SPAC are strategic advisor Shaquille O'Neal and independent director Martin Luther King III.
But Forest Road Acquisition II is a completely separate entity from its sibling SPAC, and news of a second public offering coming from the investment team doesn't really affect the original Forest Road Acquisition.
The SPAC's merger with Beachbody and MYX Fitness will value the combined company at almost $3 billion. It comes as the popularity of at-home fitness applications has grown during the pandemic. "With brands such as P90X, INSANITY and 21 Day Fix, Beachbody has consistently expanded its market share over the past two decades through its proven model of integrating the most comprehensive library of premium fitness content with easy-to-follow nutrition guidance and supplements," Forest Road said in a statement.
But investors jumping into Forest Road Acquisition today on the news that the former Disney executives will be co-CEOs of Forest Road Acquisition II when it goes public are missing the mark. An investment in the original SPAC is now one based on the future success of the new Beachbody-led operations.