E-commerce bulk retailer Boxed announced this morning that it is going public via a merger with Seven Oaks Acquisition Corp., a publicly-traded special purpose acquisition company (SPAC).
According to the announcement, "The combined company will be called Boxed, Inc. upon the closing of the transaction and is expected to be listed in the U.S. under a new ticker symbol. Boxed will continue to be led by Chieh Huang, Boxed’s Chief Executive Officer. Gary Matthews, Chairman and Chief Executive Officer of Seven Oaks Acquisition Corp., will serve as Boxed’s Chairman of the Board when the business combination is complete."
The announcement notes the following highlights from the deal:
"Leverages proprietary technology to promote a curated, simple shopping experience which drives big basket sizes of approximately $100, or eight items per average order, for its B2C platform … Significant B2B business servicing a wide-range of customers, from small and midsize businesses to Fortune 100 enterprises; well-positioned to capitalize on the reopening of the U.S. economy … Rapidly growing BoxedUp paid subscriber base providing a loyal, recurring revenue stream … Vertically-integrated technology stack that includes the customer-facing front-end, the operational back-end software and homegrown fulfillment automation robotics … Monetizing proprietary technology platform through unique SaaS business … Proven commitment to an ESG mission with a majority of corporate office positions held by ethnic minorities, and the Company consolidates large orders to reduce carbon footprint."
In its coverage, the Wall Street Journal writes that "Boxed faces mounting competition for its business. While higher than before the pandemic, grocery delivery sales have slowed recently. Instacart Inc., which has said it expects to go public, is pitching its service to businesses and recently introduced 30-minute delivery. Instacart, DoorDash Inc. and Uber Technologies Inc.’s Uber Eats division are also delivering a wider assortment of goods such as baby products, prescriptions and electronics in addition to restaurant meals and groceries.
"Despite recent growth, they are struggling to turn a profit, squeezed by labor and shipping costs.
"Boxed isn’t profitable, Mr. Huang said, but Boxed and Seven Oaks projected that its software, advertising and delivery businesses would help it turn a profit within several years. Boxed’s sales growth has also slowed from high levels at the start of the pandemic last spring, but the company said it expects to continue adding customers."
According to the announcement, "Under the terms of the proposed transaction, Boxed and Seven Oaks will merge with a pro forma combined equity value of approximately $900 million. The combined company is expected to receive $334 million in net cash proceeds from a combination of Seven Oaks’ cash in trust of approximately $259 million, assuming no redemptions by Seven Oaks’ public stockholders, as well as a $120 million fully committed private placement financing. There are no secondary shares being sold by existing Boxed shareholders in the transaction."
Scott Moses of PJ Solomon has been advising Boxed on the deal.
- KC's View:
Mrs. Content Guy loved Boxed - she has found it during the pandemic to be better than most online retailers at keeping us stocked up on essentials, and strong on prices.
If this gives Boxed a new lease on life, making its business strategy more sustainable over time, then that's a good thing for competition. Seems to me that this is something that Tom Furphy predicted here in an Innovation Conversation several years ago - that eventually Boxed would have to find a partner that would give it a stronger financial underpinning.