UPDATED, Aug. 17, 12:43 p.m.: In the wake of a failed merger, a proptech SPAC led by one of New York’s most prominent retail landlords says its intended acquisition target violated the terms of the deal.
In November, Crown Proptech Acquisitions, led by Richard Chera, struck a deal to take smart-building technology startup Brivo public through a SPAC merger. The deal, the companies announced at the time, would create a company with an enterprise value of over $800 million. Lender Golub Capital was meant to provide $75 million in a convertible note, and the Crown entity raised $276 million from investors.
Brivo was founded in 1999 by current CEO Steve Van Till. It was acquired for $50 million in 2015 by Dean Drako, who became chairman.
Crown and Brivo had until Aug. 9 (extended from July 10) to close the deal. According to sources familiar with the discussions, Crown was to put in a minimum of $95 million, $68 million of which would come from Golub. Crown, however, was unable to raise the additional funds, in part due to market hostility toward SPAC mergers and the poor performance of proptech firms that have gone public through that route.
After the deadline passed, Golub withdrew the funds, and Crown disclosed it did not have the cash on hand to close the deal, as The Real Deal reported last month.
In a new SEC filing, Crown says that it received word from Brivo on Aug. 10 that it was terminating the SPAC deal. Crown alleges in the filing that Brivo violated the terms of its agreement with Crown.
“Crown believes that prior to termination, Brivo breached the Business Combination Agreement,” it states in the SEC filing, adding that an entity affiliated with Brivo chairman Dean Drako also breached the stockholder support agreement.
“Crown intends to vigorously pursue its remedies,” it said in the filing Tuesday. The filing does not specify how Crown believes Brivo breached the agreement.
Crown declined to comment on the filing. In a statement to TRD Wednesday, Brivo denied any breach of agreement, and said that “what really happened is that Crown wanted to renegotiate the terms from what we had agreed in our BCA last November. Then they were not able to reach agreement with their primary financing source to extend, which meant that they couldn’t meet the minimum cash condition of the deal.”
At that point, Brivo said, “we had no choice but to walk away.” The company said it intends to defend itself against the charges and will “consider other options.”
After a flurry of SPAC deals in 2020 and early 2021, the market became a lot less receptive to SPAC mergers, and SPAC sponsors have struggled to raise cash for their acquisitions. Casualties include venture capital firm Fifth Wall, which dropped plans to sponsor a second SPAC, and Goldman Sachs, which indicated it would stop all SPAC-related activity.
Along with Chera, the SPAC’s management team included lead strategic advisor Rasheq Zarif and CFO Pius Sprenger, a former executive at Cantor Fitzgerald and Deutsche Bank. Sprenger and another officer, Martin Enderle, have resigned from the firm effective Aug. 12, the filing shows.
Chera is a son of late retail titan Stanley Chera and is a principal at Crown Acquisitions, one of New York City’s biggest retail landlords.
This story was updated with a statement from Brivo.