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Owlet Baby Care Inc. ("Owlet" or the "Company") and Sandbridge Acquisition Corporation (NYSE:SBG) ("Sandbridge"), a special purpose acquisition company co-sponsored by affiliates of Sandbridge Capital and PIMCO private funds, announced today that they have entered into a definitive merger agreement. Upon completion of the transaction, the combined company's securities are expected to be traded on the New York Stock Exchange (NYSE) under the symbol "OWLT."
Company Overview
Launched in 2012 by a committed team of parents, Owlet has built a connected and accessible nursery ecosystem that brings technology and vital data to modern parenting. The Company's bestselling flagship product, the Owlet Smart Sock baby monitor, uses proprietary and innovative pulse-oximetry technology to track a baby's heart rate, oxygen levels and sleep patterns to provide parents with invaluable peace of mind. The Owlet Smart Sock integrates seamlessly with Owlet's camera product, the Owlet Cam, enabling parents to see and hear their babies via Owlet's convenient smartphone app.
Owlet's next generation innovation has resulted in strong net revenue growth, including more than 50% growth in 2020 after recording approximately $50 million in net revenue for 2019. The Company continues to pursue significant revenue upside opportunity by leveraging its proprietary data to build out its products and services, including a potential telehealth suite of recurring services. Led by a team of forward-thinking founders and seasoned management, the Company is addressing a large and growing potential addressable market of over $81 billion.
Owlet has built a strong and highly loyal customer base of brand ambassadors who value the information and peace of mind that Owlet's products provide during some of the most critical moments of their child's developmental journey. The majority of Owlet's consumers and loyal advocates are first-adopters and millennials, a high-value demographic that is influential in product trends and digital-application adaptation. The Company's product and services platform is designed to serve these customers and future generations by providing parents with the right information at the right time to best care for their babies. Owlet's products have garnered industry praise and recognition, receiving 21 industry awards and 15 design and innovation awards, including the honor of winning the Consumer Electronics Show award for Best Wearable for the Owlet Band in 2019 and being an honoree in the Consumer Electronics Show in the Software & Mobile Apps category for the Owlet Dream Lab in 2020.
Management Comments
"We're thrilled to partner with Sandbridge as we continue our goal of helping parents succeed in the parenting journey," said Kurt Workman, CEO and founder of Owlet. "Ken Suslow and Domenico De Sole are category-defining modern brand creators, and will help usher Owlet into our next phase of growth as we expand our product suite and work to support family needs through some of the most crucial years of raising children. We look forward to further serving our current loyal customers as well as addressing a sizable untapped market, spanning multiple consumer touchpoints, and building Owlet into a vital family platform that will serve parents for generations to come."
"Since day one, the core thesis at Eclipse has been that true disruption of physical-world sectors, such as consumer health, would require full-stack — rather than incremental — solutions. Having met Owlet in its infancy and helped build the company for the last few years, I am excited about this well-deserved next step," said Lior Susan, Chairman of Owlet's Board and Founding Partner of Eclipse Ventures, Owlet's largest investor. "Owlet's goal is to become an indispensable part of the modern nursery, and we are enthusiastic to extend the reach of the company by working with Sandbridge."
"Ken Suslow brings vast consumer brand expertise, having led Sandbridge Capital's investments in global brands such as Farfetch, Rossignol, Thom Browne, Hydrow, Youth to the People and the RealReal," Susan added. "With additional support from the PIMCO private funds team, the key partners are aligned for the future of the company and working to create long-term shareholder value — positioning Owlet to serve more families and provide even greater peace of mind to parents."
Ken Suslow, Chairman & CEO of Sandbridge Acquisition added, "We are excited to be partnering with Lior Susan and the impressive Owlet team on their next-gen, mission driven approach to building out the connected nursery ecosystem of the future – we believe the opportunity here is immense. The Company's modern data driven platform serves as a fundamental tool for enabling parents to monitor their infants' wellbeing, while also presenting a compelling opportunity to leverage this real-time data into smart telehealth solutions as the next wave of this dynamic platform continues to evolve. Sandbridge is truly gratified to partner with Owlet on such substantial growth opportunities in support of global infant health & wellness."
Key Transaction Terms
The business combination values Owlet on a pre-transaction basis at a $1,000 million equity value and values the post-transaction combined company at an enterprise value of approximately $1,074 million. It is expected to deliver up to $325 million of cash to the combined company, after payment of estimated transaction expenses, through the contribution of up to $230 million of cash held in Sandbridge's trust account and a $130 million concurrent private placement (PIPE) of common stock, priced at $10.00 per share. PIPE participants include leading institutional investors, including funds managed by Fidelity Management & Research LLC, Janus Henderson Investors, Neuberger Berman Funds, OrbiMed, private funds affiliated with PIMCO, and Wasatch Global Investors.
As part of the transaction, Owlet's current management and existing equity holders intend to roll nearly 100% of their equity into the combined company. Leading existing institutional backers of the Company, including Eclipse Ventures and Trilogy Equity Partners, intend to roll 100% of their equity into the combined company.
The transaction has been unanimously approved by the Boards of Directors of both Owlet and Sandbridge. Completion of the proposed transaction is subject to approval of Sandbridge and Owlet stockholders and other closing conditions, including a registration statement being declared effective by the U.S. Securities and Exchange Commission (the "SEC"), and is expected to be completed in the second quarter of 2021.
A more detailed description of the transaction terms and copies of the key transaction agreements will be included in a current report on Form 8-K to be filed by Sandbridge with the SEC.
Advisors
BofA Securities is serving as exclusive financial advisor to Owlet and Latham & Watkins LLP is serving as legal counsel.
Citigroup is serving as exclusive capital markets advisor to Sandbridge and Citigroup and BofA Securities are serving as private placement agents to Sandbridge. Ropes & Gray LLP is serving as legal counsel to Sandbridge.
Management Presentation
A presentation made by the management teams of Owlet and Sandbridge regarding the transaction will be available on the websites of Sandbridge at www.sandbridgeacquisition.com and Owlet at www.owletcare.com. Sandbridge will also file the presentation with the SEC as an exhibit to a Current Report on Form 8-K, which can be viewed on the SEC's website at www.sec.gov.
Posted In: SBG
