SAN FRANCISCO -- Tempo Automation and ACE Convergence Acquisition Corp. a special-purpose acquisition company focusing on industrial and enterprise IT, announced today that they have entered into a definitive merger agreement.
Upon closing of the transaction, the combined operating entity will be renamed Tempo Automation Holdings and shares of its common stock are expected to trade on the Nasdaq under the ticker symbol TMPO.
The merger forms a company with with estimated pro forma full year 2021 revenues of approximately $146 million. Closing is expected in the first quarter of 2022, subject to regulatory and stockholder approvals and other customary closing conditions.
The companies estimate post-transaction equity value of approximately $919 million based on current assumptions with up to $391 million in gross cash proceeds to the company, consisting of $230 million from cash in trust by ACE, assuming no redemptions by shareholders of ACE and $161 million from other financing from institutional investors and technology lenders including Point72 Ventures Investments, ACE Equity Partners (an affiliate of ACE’s sponsor), Firsthand Funds, Lux Ventures, Structural Capital, and SQN Venture Partners.
The majority of the cash proceeds will be utilized to complete the acquisitions of Advanced Circuits and Whizz concurrently with the closing of the business combination of Tempo with ACE.
The financing is further supported by an up to $95 million backstop of potential redemptions by ACE shareholders, with up to $25 million of such backstop provided by ACE Equity Partners and up to $70 million provided by Structural Capital and SQN Venture Partners.
Tempo's definitive agreement with Compass Diversified calls for the purchase of all outstanding equity interests of its majority owned subsidiary, Compass AC Holdings, the parent company of Advanced Circuits, a quickturn printed circuit board fabricator with annual revenues of about $90 million., companies. By adding Advanced Circuits’ manufacturing capabilities, Tempo’s platform becomes more vertically integrated and accumulates more manufacturing data, which we expect to further accelerate customers’ time-to-market.
Additionally, Tempo has entered into a definitive agreement to acquire all of the outstanding equity interests of Whizz, a provider of electronics product design, development and manufacturing services, privately held and based in San Jose, CA. Whizz’s capabilities are expected to add vital upstream product design services and a global footprint to support customers throughout their product development process while providing more manufacturing data to fuel Tempo’s platform.
Upon closing, the combined company will be led by the Tempo management team, including president and chief executive Joy Weiss and chief financial officer Ryan Benton. Behrooz Abdi, chief executive and chairman of ACE, is expected to remain on the combined company’s board of directors.
These acquisitions are expected to strengthen Tempo’s ability to power innovation with transformative design and manufacturing capabilities, while providing rich new manufacturing data for its AI software. These transactions will leverage Tempo's software platform and create an end-to-end vertically integrated platform company in what has traditionally been a highly fragmented electronics prototyping and on-demand production industry in the United States.
“Tempo Automation is an ideal fit with our charter of merging with a leader in industrial and enterprise information technology segments,” said Abdi. “The growing complexity of electronics can't be overstated, and Tempo's use of software and AI in its manufacturing platform allows its customers to move at the speed of innovation. We're confident that the company will experience a strong growth trajectory as demand for on-shoring of printed circuit board prototyping and manufacturing continues to increase.”
“Tempo Automation’s manufacturing platform, driven by software and data-driven learning, has immense power to transform the electronics manufacturing industry,” said Sri Chandrasekar, managing partner, Point72 Ventures. “We are thrilled to have been an early investor in Tempo and look forward to continuing to support them as they enter this next stage of growth.”
“Our customers are among some of the world's greatest innovators, using our platform to power initiatives that include travel to the moon and Mars,” said Weiss. “We expect that this business combination will greatly broaden our capabilities and footprint in the market, provide substantial manufacturing data to fuel our platform and allow us to help more and more customers accelerate their innovations.”