Veteran-owned and operated coffee company, Black Rifle Coffee Company, is set to go public via a combination with special purpose acquisition company (SPAC) SilverBox Engaged Merger Corp I (Nasdaq: SBEA) with a $1.7 billion pro forma enterprise equity valuation, announced on November 2, allowing the company to accelerate growth, expand customer engagement and improve impact for stakeholders.
Pursuant to the deal, this is a fully financed transaction with $300 million in common equity commitments at $10 per share with “an innovative backstop feature, including $100 million committed from Engaged Capital.” The deal will also be financed with up to $345 million in cash and $300 million from other investors. As a result, the total capital available to Black Rifle Coffee Company at the end of the deal will be up to $545 million.
The deal would also place up to $225 million of additional cash on Black Rifle Coffee Company’s balance sheet to help accelerate its digital-first omnichannel strategy and its growth. The $1.7 billion valuation is around four times projected 2023 revenues.
Black Rifle Coffee Company will reorganize as a Public Benefit Corporation. Together, Black Rifle Coffee Company and Silver Box Engaged will donate more than 530,000 shares the equivalent value of more than $5.3 million at $10 per share to the BRCC Fund, the company’s foundation in support of its mission to help veterans.
Black Rifle Coffee Company has a strong financial profile, specifically it is a “highly scalable platform that is gaining market share,” as noted in the filings. According to the filings, its 2021 revenue is “estimated to grow approximately 40% to $230 million, with projected gross margins of approximately 40%.” Furthermore, it has a proven multi-channel growth strategy, which it achieves via “direct-to-consumer subscriptions, branded coffee shops, ready-to-drink products at major national outlets, and increased wholesale distribution” from chains like 7-Eleven, Sam’s club and Walmart. Moreover, in 2020, the direct-to-consumer subscriptions grew by 92% and the wholesale business grew by 182%.
According to the press release, Black Rifle Coffee Company, which was founded in 2014, is a veteran founded and operated growing coffee company with “more than 1.9 million lifetime consumers, 270,000+ active coffee club subscribers” with a large social media presence.
“As a company founded and led by Veterans, serving these communities drives everything we do,” Evan Hafer, CEO and Founder of Black Rifle Coffee Company, said. “I’m so proud to join [ ] the SBEA team and have the confidence of investors such as Engaged Capital. They’re completely in support of our mission and they’ve aligned their financial interests with our Company’s performance. This combination will provide the capital BRCC needs to grow, serve great coffee, and move us closer to our goal of hiring 10,000 Veterans as we open more stores nationwide.”
“When SBEA went public earlier this year, we made a commitment to our investors and partners to identify a fundamentally sound business with high-integrity leadership and a strong growth trajectory,” SBEA Executive Chairman Joe Reece said. “We have made good on that commitment by entering into this merger agreement with BRCC. Evan and the rest of the BRCC team have built a powerful consumer brand that is achieving impressive revenue growth and gross margins while catalyzing positive impact across the long-underserved Veteran and first responder communities.”
SilverBox Engaged Merger Corp I (Nasdaq: SBEA) is sponsored by SilverBox Capital LLC and Engaged Capital LLC, “who have collaborated to create an alternative asset management platform,” according to the filing.
The deal is expected to close Q1 2022. Upon closing, the combined company will be called BRC Inc. Additionally, Black Rifle Coffee Company’s founders, management and existing equity holders will retain significant interests in the company; shares will be subject to forfeiture based on company performance. SilverBox Engaged also has tied sponsor interest to Black Rifle Coffee Company’s growth and returns.
Black Rifle Coffee Company is represented by Kirkland & Ellis LLP with BDT & Company, LLC serving as financial advisor. SilverBox Engaged is represented Paul Hastings LLP.
Before the announcement, SilverBox Engaged stock was trading at $9.82, when it was announced on Nov. 2, its stock rose to $11.33 and on Nov. 10 stock was at $10.09.
According to SilverBox Engaged’s website, the combination with Black Rifle Coffee Company appears to be the first investment of the SPAC since its initial public offering.
