Business Context and Reporting Period
Reinvent Technology Partners Y (RTPY), a Cayman Islands blank check company, filed this Form 8-K on July 15, 2021, reporting events occurring primarily on July 14, 2021. RTPY entered into a definitive merger agreement with Aurora Innovation, Inc. and RTPY Merger Sub Inc. to combine RTPY and Aurora. Upon closing, RTPY intends to domesticate as a Delaware corporation and rename itself Aurora Innovation, Inc.
Transaction and Key Financial Terms
- Aurora’s implied pre-transaction equity value is $11.0 billion, based on a deemed value of $10.00 per share.
- Aurora shareholders are expected to receive Class A and Class B common stock of the combined company. Class B shares will have 10 votes per share, compared with one vote per Class A share, while the economic terms are the same.
- PIPE investors subscribed for 100 million Class A shares for aggregate proceeds of $1.0 billion. The PIPE is expected to close substantially concurrently with the merger.
- Closing requires available cash from RTPY’s trust account, after redemptions, deferred underwriting commissions, transaction expenses, and the PIPE Investment, to be at least $1.5 billion.
- RTPY’s redemption obligations may not exceed $500 million, and RTPY must have at least $5,000,001 of net tangible assets at closing.
- No revenue, profit, cash flow, operating margin, debt, or liquidity metrics for Aurora are provided in the filing text.
Material Changes Versus the Prior Comparable Period
The filing reports a proposed business combination rather than periodic operating results. Accordingly, it does not provide a comparable-period income statement, cash flow statement, balance sheet, or quantified year-over-year changes. The material development is the execution of the merger agreement and related financing and support agreements.
Conditions, Outlook, Risks, and Unusual Items
- Closing is subject to shareholder and equityholder approvals, effectiveness of an SEC Form S-4 registration statement, expiration or termination of the Hart-Scott-Rodino waiting period, Nasdaq listing approval, satisfaction of minimum cash and net tangible asset conditions, and the absence of injunctions or a material adverse effect on Aurora.
- RTPY shareholders may redeem shares, subject to the transaction terms. If more than 22.5% of RTPY Class A shares are redeemed without replacement financing, the sponsor may forfeit Class B shares under a sliding-scale arrangement.
- The sponsor and certain RTPY directors and officers agreed to support the transaction. Certain Aurora holders also agreed to vote in favor of the transaction.
- Shares held by major Aurora equityholders and the sponsor will be subject to multi-year lock-up provisions, generally releasing in 25% tranches on the first through fourth anniversaries of closing, subject to specified exceptions.
- PIPE investors receive registration rights, with a resale registration statement generally required to be filed within 30 calendar days after closing.
- The subscription agreements may terminate if the merger is terminated, closing has not occurred by January 10, 2022, or specified closing conditions are not satisfied.
- Key risks include failure to obtain approvals or complete the transaction, insufficient cash after redemptions, inability to complete the PIPE, regulatory and litigation risks, employee-retention and business-disruption risks, volatility, competition, and the highly regulated and developing self-driving industry.
- The filing contains forward-looking statements and states that actual results may differ materially. The investor presentation and press release referenced in the filing are not operating guidance or guarantees of performance.
Important Facts for Investors to Verify
- Review the subsequent Form S-4 and proxy statement for the final transaction structure, ownership percentages, dilution, risk factors, and audited Aurora financial statements.
- Verify whether the $1.5 billion minimum cash condition and $500 million redemption cap were satisfied at closing.
- Confirm completion of the $1.0 billion PIPE, the number of shares ultimately issued, and any additional financing or backstop arrangements.
- Assess the voting and economic implications of the proposed dual-class structure, including the 10-votes-per-share Class B stock.
- Review final merger consideration, sponsor forfeiture and vesting provisions, lock-ups, registration rights, and warrant terms.
- Determine whether the merger closed, was amended, or was terminated, and review Aurora’s subsequent filings for actual revenue, cash burn, debt, liquidity, and operating performance.