SPAC deal for Perseus-backed Workflow falls apart

The $743m transaction was terminated after certain conditions were not met, continuing the long dry spell for SPAC deals in the market downturn.

The $743 million sale of Perseus-backed stationary maker Workflow Management has been terminated because it failed to meet its closing date deadline.

Florida-based special purpose acquisition company (SPAC) Enterprise Acquisition Corporation was to assume $490 million of Workflow debt, and the remainder of the transaction price would have been financed through the reverse merger of $179 million in Enterprise common stock. Enterprise planned to list Workflow on the NASDAQ stock exchange.

Enterprise, an American Stock Exchange-listed special purpose acquisition vehicle, could have paid as much as $743 million for the acquisition if certain management incentive programs were triggered.

Instead, Workflow will remain a portfolio company of Washington, DC-based Perseus and The Renaissance Group, a private investment firm. Perseus and Renaissance partnered in 2004 to de-list Workflow for $225 million.

Enterprise “will actively seek an alternative business combination with a target business prior to 7 November 2009”, the special purpose acquisition vehicle said in a statement. Enterprise was launched in 2007 in a $225 million IPO by Florida-based private investment firm Marc Bell Capital Partners.

SPAC acquisitions have dried up as the mergers and acquisitions market has withered in the global economic downturn. Hedge funds, typically the largest holders of blank cheque stock, have backed away from the vehicles.

One of the largest SPAC transactions last year involved GHL Acquisition, sponsored by Greenhill & Company, which agreed a $591 million merger with satellite phone company Iridium Holdings.

Shareholders in GHL Acquisition and current Iridium shareholders, if they approve the deal, would receive about $77 million in cash and 36 million common shares of the combined entity, which GHL plans to rename Iridium Communications and list on the Nasdaq.  In February, an Iridium satellite was destroyed when it collided with a non-operational Russian satellite, forcing the company to re-route network traffic to avoid service disruptions.