FORM Holdings Corp. has agreed to acquire 100 percent of airport spa business XpresSpa.
FORM Holdings, a diversified holding company focused on acquiring and developing small to mid-market portfolio companies with superior growth potential, said the transaction “supports a growth strategy” for the spa company.
XpresSpa provides air travelers premium health and wellness services, as well as a branded line of exclusive luxury travel products and accessories at its 51 locations across 21 major airports. In 2016, XpresSpa anticipates generating more than $40 million of revenue and approximately 20 percent store level margin contribution, FORM Holdings said.
FORM Holdings added that XpresSpa is expected to open several new locations through the remainder of 2016 and early 2017, and it anticipates increasing its number of total spa locations from 51 to more than 100 in the next few years.
“XpresSpa’s dominant market share, enormous growth potential and its powerful brand present a compelling value proposition for us, and we are excited to work with CEO Ed Jankowski and his team,” said Andrew D. Perlman, CEO of FORM Holdings. “This acquisition fits with our strategy and mission to identify and acquire small to mid-sized companies that would benefit from additional capital, management expertise and the implementation of best practices across various components of their business. We believe that by working closely with these businesses, as well as the flexibility afforded by our holding company structure and access to capital, we will be able to realize value for our shareholders by accelerating XpresSpa’s growth.”
Jankowski called the deal a “transformative transaction,” adding: “We have experienced and continue to experience significant growth and momentum, and we look forward to leveraging FORM Holdings’ resources to execute on opportunities that will enable us to further grow our business by delivering an exceptional experience to our customers.”
Jankowski is expected to continue to lead the XpresSpa business as CEO after the transaction closes.
Mistral Equity Partners, the majority shareholder of XpresSpa, and other existing XpresSpa holders, will participate in a private placement into FORM Holdings common stock of $1.73 million, at $2.31 per share, which FORM Holdings will then invest in XpresSpa.
XpresSpa equity holders will receive 2.5 million shares of common stock in FORM Holdings, five-year warrants to purchase 2.5 million shares of FORM Holdings common stock, at an exercise price equal to $3.00 per share, and $23.75 million of FORM Holdings’ newly issued convertible preferred stock. The FORM Preferred Stock shall be initially convertible into an aggregate of 3.95 million shares of FORM Common Stock, which equals a $6.00 per share conversion price, and each holder of FORM Preferred Stock shall be entitled to vote on an as-converted basis.
Andrew Heyer, CEO of Mistral and an experienced investor with expertise in the retail sector, is expected to join FORM Holdings’ Board of Directors upon completion of the transaction.
The transaction, which has been approved by FORM Holdings’ and XpresSpa’s respective boards of directors, is expected to close in the fourth quarter of 2016, subject to closing conditions and approval by the FORM Holdings’ stockholders.
