The deal with Lionheart Acquisition Corp II is expected to fetch $230 million in proceeds for MSP, it said on Monday. https://refini.tv/3wuAoOV
MSP, led by billionaire entrepreneur John Ruiz, collects and analyzes data on the government-backed Medicare and Medicaid insurance claims, and then helps recover money owed to its clients, which include hospitals, health insurers and medical providers.
"Medicare and Medicaid pay billions of dollars of healthcare claims they should not pay. This harms taxpayers, the underprivileged, and America's senior citizens," Ruiz said.
"Our tools help fix this broken system."
Medicare Advantage plans cater to Americans older than 65 and those with disabilities.
The Florida-based company, founded in 2014, earns a fee after a successful recovery. The Lionheart deal will help MSP quickly buy claims portfolios, while further growing its data-analytics capabilities, it said.
Special purpose acquisition companies, or SPACs, are shell companies that raise funds through an initial public offering to take a private company public through a merger at a later date.
Lionheart raised $230 million in an initial public offering in August. The company's shares were up 5.2% at $10.40 in trading before the bell.
At $32.6 billion, the merger is second in size only to the nearly $40 billion deal inked in April between Southeast Asia's Grab and Altimeter Growth Corp.
The MSP deal is also the largest since the U.S. Securities and Exchange Commission said it was considering new rules to protect investors amid a surge in the use of SPACs as capital-raising vehicles.
It also pointed to a rebound in merger activity in the blank-check space after Wall Street's appetite showed signs of waning following a period of frenetic deal-making using the investment vehicle.
In the past few months, biotech company Ginkgo Bioworks and SoftBank-backed mortgage startup Better HoldCo have announced multi-billion dollar deals with blank-check vehicles.
Lionheart stockholders who do not redeem shares of its common stock will be issued more than 1 billion warrants in connection with the merger, the company said.
MSP's founders will sell an equivalent number of their shares back to the company so that the provision won't dilute the stock's value.
MSP will list its stock on Nasdaq under the ticker symbol "MSPR". Its existing and additional warrants will trade as "LCAP W", and "MSPR W", respectively.
Keefe, Bruyette & Woods served as the financial adviser to MSP, while Nomura Securities advised Lionheart.
The deal is expected to be completed in the fourth quarter of 2021.
(Reporting by Noor Zainab Hussain, Niket Nishant, Manas Mishra; Additional reporting by Sneha Bhowmik and Juby Babu; Editing by Sriraj Kalluvila and Shailesh Kuber)
By Noor Zainab Hussain