Tag Archives: FZT/U



We wrote in late July about the substantially improved SPAC structure at FZT and in late August provided our interpretation of the Investor Presentation. In summary, we believe that, opposed to many other SPACs, this Business Combination will be consummated, due to the fundamental attractions of Falcon’s Beyond artistic creativity and theme park design/operating skills, combined with the operating and financial strength of their Joint Venture partner, Melia’ Hotels International. Our previous articles can be accessed with the SEARCH function on our HOME Page. (Use “FZT”). As we wait for the S-4 filing, which will obviously provide a great deal of quantitative information we thought it would be productive to fill out the qualitative mosaic of this unique “entertainment/hospitality” venture. We therefore visited last week the first site to be developed by Falcon’s/Melia’, at Punta Cana in the Dominican Republic.

Development of the Katmandu Theme Park is well along, with heavy construction largely completed, mechanical and electrical support installed, predictably still with a great deal of finishing work to be done. Equipment, some of it on site, is yet to be installed. Flooring, wall coverings, final lighting, all kinds of finishing treatment is still to be done, but the project seems on track to be completed by late this year or very early in ’23.

The 2018 built five star hotel that Melia’ Hotels (founded 65 years ago)  has contributed to the Joint Venture,  currently called Paradisus Grand Cana, to be renamed Falcon’s Resort by Melia’, is a standout. Whether you call it the “hospitality quotient” or “customer pleasing culture”, it was outstanding. Every staff member seemed to be wearing a smile, and that does not happen by accident. There was  always somebody nearby, eager to help. Every surface was spotless and the maintenance of the landscape was impeccable. Labor is obviously available at an acceptable wage and happy to be employed by Melia’. It’s fair to say that our previous article describing the Falcon’s/Melia’ Joint Venture  did not emphasize adequately what Melia’, managing 380 hotel properties worldwide, brings to the table. Our trip was obviously instructive in terms of Melia’ operating skills. Melia’s financial strength seems important as well, and we will address that more completely in the near future.

Below we provide pictures, from the Melia’ Hotel website, that show important aspects of the resort experience at   Punta Cana. As you scan them, think about what this might cost at resorts you’ve been to and we will provide the relevant cost/day at the end of this article.  We should emphasize again that the pictures were matched, in terms of visual appeal, cleanliness, and the quality of the food service, by our personal experience.



RATES ARE CHARGED “PER PERSON”, AND ARE “INCLUSIVE” of ROOM, FOOD & BEVERAGE (INCLUDING ALCOHOL), BASICALLY “ALL YOU CAN EAT AND DRINK”. Melia’ has a reward  system in place, with 14 million members, that provides a discount up to 20% for repeat customers. The “rack rate” quoted to me today, without discount or promotions, for the One Bedroom Suite pictured, is $370/night, “all inclusive” for two this time of year (“off season”). The rate in February (“peak season”) would be about 35% higher or about $500 per couple per night, all inclusive. Considering that food and beverage for two on vacation could normally run $200-300 per day, the remaining room cost “off season” would be $170-270/day “off season”, 35% higher in February or March, at “peak”. That’s pretty good, but Melia’ Reward Members, with a 20% discount  would only pay $296/per night per couple today, almost nothing for the room after deducting the normal cost of food and drink. At peak season $500 per couple per night leaves a net room cost of only $200-300, also outstanding value when there is snow on the ground in New York City.


While noting that Paradisus Grand Cana, to be renamed Falcon’s Resort by Melia’, is among the highest priced facilities within the Melia’ portfolio, the hospitality skills demonstrated are likely in place at lower priced facilities as well (at a proportionate level). We’ve discussed before the attractive ROI for both Falcon’s Beyond and Melia’ as a result of the Joint Venture. Now that we have visited Punta Cana, we can better appreciate the hospitality expertise of Melia’ and its complement to the creativity within Falcon’s Beyond.

It is worth recalling that Melia’, in Mallorca, was able to charge 11% higher room rates, with free access to the Katmandu Park. There seems to be similar pricing power in this situation, considering the current price/value equation and reports that the hotel is already at capacity “in season”.  Previous cash flow generation should be materially improved within the Joint Venture because of higher room rates and occupancy, also augmented by lower food cost since guests will eat some of their meals at the Katmandu Park rather than the hotel. As we’ve reported, the Punta Cana project will be followed within eighteen months by similar developments in Tenarife (in the Canary Islands, off the coast of Spain) and Playa del Carmen (in Mexico). Beyond that : Melia’ manages  a portfolio of 377 other hotels, many of which are in “priceless” locations.

We will report further once the S-4 is filed.

Roger Lipton






Introduction: This proposed transaction was announced on July 12th. We’ve followed the professional careers within the FAST II Sponsorship group for many years, were initially intrigued with their creativity in terms of improving the typical SPAC structure, and informed our readers accordingly on 7/28. After studying the Investor Presentations, this situation is well worth more study.  A preliminary S-4 has not yet been filed, but between the Investor Presentation and publicly available information regarding Falcon’s Beyond,  the Company is introduced here in fifty-nine seconds

( https://vimeo.com/570417222 ) (point & click, point & click on link)

and we provide the report below.


Relative to the improved SPAC structure, our 7/28 article concluded:It’s possible that the FZT/Falcon’s Beyond deal would take place with or without the adjustments. In our mind, however, the new structure provides a much more balanced approach between “organizers”, operating principals and the public investors and is no doubt a function of &vest’s navigation of the SPAC market over the past few years. There is less of a “promote” for the organizers and underwriters, potential stock sales by the operating principals are longer term than normal, more dependent on building the business as well as the stock price, all improving the reward/risk profile for public investors.”  See our 7/28 article for “Transaction Overview” and “SPAC Shareholder Incentives”.


FAST Acquisition Corp. II (FZT) raised $222M to utilize in acquiring a company in the hospitality industry.  The Sponsorship group and proposed Board of Directors have outstanding brand building credentials in the hospitality/restaurant/retail industries. Included are &vest’s Doug Jacob (co-founder of &vest), Bill Hinman (partner of &vest and former Director of the SEC’s Division of Corporate Finance), Sandy Beall (partner of &vest, founder of Ruby Tuesday’s, founder of Blackberry Farm and Blackberry Mountain) and others.

FAST II is proposing the acquisition of well-established Falcon’s Beyond, an Orlando, FL based fully integrated, experiential entertainment enterprise with a collection of both Brick & Mortar and Intellectual Property assets. The principals at Falcon’s Beyond have unquestionable creative and operating credentials. The Executive Chairman of Falcon’s Beyond is Scott Demerau, founder in 2007 of the House of Katmandu in Mallorca, Spain, which became a model for successful theme parks worldwide. In 2012 he established a 50/50 Joint Venture with Melia’ Hotels, which operates more than 380 resort properties across over 40 countries. The CEO of Falcon’s Beyond is Cecil D. Magpuri, who founded in 2000 predecessor Falcon’s Treehouse, which has designed, planned and helped to execute over $100 billion worth of hospitality/entertainment venues worldwide. In addition to Falcon’s Creative Group that designs the projects, and Falcon’s Beyond Destinations that implements the plans and owns the hotels, theme parks and retail destinations, there is Falcon’s Brands that will deploy proprietary and partnered brands across entertainment and consumer product categories. Among the Board Members of Falcon’s Beyond is Simon Philips, previously General Manager of The Walt Disney Company EMEA and President of Marvel Entertainment.

The broad objective of the newly public Falcon’s Beyond will be to produce operating cash flow, at the same time building for themselves brick and mortar, as well as intellectual property, just as they have created, planned and built for others over the last twenty-two years.



We will describe the deal terms and valuation in greater detail below but the post-deal valuation, at $10.00/share, will be about $1B, about 6.7x the projected $150M EBITDA run rate by mid 2025.  Importantly, the principals of Falcon Beyond are merging their entire professional careers into this venture and will own about 80% of the equity, as well as providing $60M to the Melia’ joint venture. Public SPAC shareholders (assuming modest redemption) will own about 10.7%. Private Placement investors will own 5.8% and Sponsors about 3.0%.

Critically, there will be no operating “burn rate” at the outset, since the Falcon’s Creative Group is already a going concern, with tangible visibility to provide $755M of goods and services over 4-5 years. The cash flow generation from Creative should help to fund the capital needs of Destination’s brick and mortar effort, with the first Melia’ JV project (Punta Cana) opening by early 2023 and two more to follow between early ’24 and mid ’25. Longer term, the potential from building Brands’ proprietary Intellectual Property could be a substantial third leg of Falcon’s unique position in hospitality/entertainment and represents significant upside to investors.


The July 12th Investor Presentation, with the associated conference call, provided some context as to how the key principals came to form today’s Falcon’s Beyond. Executive Chairman, Scott Demerau, has spent decades building and operating themed entertainment facilities, both in the US and abroad.  In 2007 he founded the House of Katmandu, a relatively small theme park adjacent to one of 380 Melia’ Hotel properties, in Mallorca, Spain. Katmandu’s success, accompanied by a dramatic improvement in room rates and occupancy at the hotel, encouraged Melia’ and Demerau to expand the Mallorca site into a 50-50 jointly owned Katmandu Park & Resort venture. In the course of Demerau’s activities, at Katmandu and elsewhere, he used the creative services of Cecil Magpuri, CEO of then Falcon’s Treehouse, formed in 2000. Prior to Falcon’s, Cecil had been Creative Director at Universal Studios and directed several projects like Apollo13, The Ride, Twister: Ride it Out!. In 2021, Demerau and Magpuri merged their companies to create Falcon’s Beyond.

Another 2:26 minutes, broadly describing Falcon’s Beyond:

https://vimeo.com/641310306   (point & click, point & click on link)


Short to intermediate term, Creative and Destinations will be fifty-fifty contributors to the results. Longer term Brands, its economics not included in the deal discussion, is expected to be an equal third leg and therefore represents further upside for investors.

Falcon’s Creative Group, led by CEO, Cecil Magpuri, in addition to supporting three internal projects, is currently executing the master planning for five third party theme park operators. These five parks will include the design of over 100 attractions, the media production for over 19 attractions, as well as procurement of necessary hardware. This backlog (including $100M for the Destination/Melia’ JV) will amount to about $755M of billing over 4-5 years, and, based on indicated margins, should generate EBITDA of about $158M. These projects include a very large Creative project involving engagement by Saudi Arabia’s Qiddia Investment Company to lead the design of 26 assets within a new entertainment district called Qiddia. Creative began work on Qiddia in 2018 on this very long-term project that will encompass 367 square kilometers (19×19 km.,11×11 mi.). The expected operating profit within Creative should generate cash flow for investment in the brick & mortar at Falcon’s Beyond Destinations as well as buy time for Falcon’s Beyond Brands to monetize their asset light efforts.

Below: videos – 3 of $100B worth of projects – (point & click, point & click on link)

BaNa Hills Mountain Resort in Da Nang, Vietnam on Vimeo

Making-of Becoming Jane: The Evolution of Dr. Jane Goodall at National Geographic Museum on Vimeo

https://vimeo.com/279458337   Atlantis Sanya – China’s premier Underwater World

Falcon’s Beyond Destinations will be capitalizing on the potential of the joint venture with Melia’ Hotels International, owner and operator of about 380 resort hotels worldwide. In most anticipated locations Melia’ plans to contribute an existing hotel to each project within the 50-50 joint venture and Destination provides the capital for the Katmandu Park (owned 50-50) as well as the 100% Destination owned Falcon’s Central entertainment and food center. The first major JV project will be in Punta Cana, Dominican Republic, to open by early 2023. It was recently announced by Melia’ that the new park will open in December, and the hotel in the JV is already the number one hotel in Punta Cana.  The second joint location will be at Tenerife, in the Canary Islands, to open in early to mid-2024. The third spot is at Playa del Carmen, in Mexico, the park to be open in early-mid-2024 and the hotel in mid-2025.

The Investor Presentation estimates that by mid-2025, Destination’s 50% of the joint venture plus 100% of Falcon’s Central, depending on the cap rate, will be worth from $954M to $1.451B.

Falcon’s Beyond Brands is focusing on expansion, execution and monetization of proprietary as well as partnered brands. Brands, consumer products and entertainment content can all be licensed, just as proprietary existing brands such as Katmandu, Cadim, the Monster Wave and VQuarium. In conjunction with Creative and Destination, as well as 3rd party partnerships with BRON Studios, Moonbug Entertainment, PBS Kids, Epic Story Media and others, this is an asset light effort that could be very substantial over time. Management estimates that Creative and Destinations will contribute 50% each to EBITDA for the next two years, but each division could contribute about 33% longer term.


We have more to learn, from the S-4 when filed and our further research, but it seems at this point that success is more a question of how much and when, rather than if. The professionals at Falcon’s Beyond are not being asked to do anything they haven’t done before. A billion dollars is a significant starting valuation, but the ROI on over $200M of SPAC proceeds, invested productively in brick & mortar projects, and the earnings power at the Creative division should support a good portion of that. Moreover, the value of Falcon’s 50% portion of just the first few projects with Melia’ Hotels could approximate the initial $1B valuation.  Longer term, more Destination projects with Melia’ and others, expanded Creative business with Qiddiya (described below) and others, and Brands could combine to double the projected mid-2025 $150M run rate of EBITDA by ’27-’28. It is a crucial consideration that current Creative operations are cash flow positive, available for the development of brick & mortar assets. This feature, along with the banking relationships of Melia’, should allow for growth as planned, even without a broad vote of confidence from current FZT shareholders. The possibility of $150M annualized EBITDA in only about 2.5 years, the potential to build billions of capitalized value attached to new brick and mortar assets, with Intellectual Property development a material “kicker”, makes the current $1B starting point appear reasonable. Precise timing of events is always uncertain, and the degree of success cannot be assured, but the intellectual, physical and financial assets seem to be in place. While, per Yogi Berra, “Predictions are always difficult, especially about the future.”, uniquely positioned Falcon’s Beyond provides an unusually attractive investment proposition


Falcon’s and its predecessor Creative companies have executed story-driven development projects related to over $100B of projects in 27 countries and currently have $755M of revenue visibility. They are uniquely equipped to respond to the secular shift to “experiential” consumer leisure pursuits.

A 50/50 Destination driven joint venture with Melia’ Hotels, operator of 380 resort venues around the world, can provide value to Falcon’s common stock by way of $150M of annual EBITDA and $1B of asset value in about 2.5 years.

Last, but far from least, Falcon’s Intellectual Property and Brand Development is expected to be an equal third leg to Falcon’s long term value building process.  Falcon’s Creative Group designs the projects, Destination develops the hard assets, and Brands will deploy proprietary and partnered brands across entertainment and consumer product categories.

Falcon’s Creative Group

For twenty-two years Falcon’s Creative Group has executed master plans, design, and media production projects all over the world, winning over 30 industry awards, and creating the capacity to serve billions of guests. The decades of experience as a third-party consultant sets up Falcon’s to now develop physical entertainment attractions and Intellectual Property for their own account. Their historical success is supported by the fact that 58% of first-time clients have returned for additional services, the scope of which expanded by 60x. Specific projects have included master plans for Lionsgate Zone in Dubai, U.A.E. and Atlantis Sanya in Hainan Island, China. Attractions and experiential destinations have included Hulk Epsilon Base 3D in Dubai, U.A.E. and Kennedy Space Center Heroes & Legends in FL, USA. Captivating media projects have included Become Jane: The Evolution of Jane Goodall, in Washington, DC, and Halo: OutPost Discovery which toured across the USA. Experiential Restaurant and Retail developments have included Finn & Jake’s Everything Burrito and Marvel Vault Store, both at the IMG Worlds of Adventure Theme Park in Dubai. FBY’s award winning technology includes experiences such as Spheron, CurcuMotion, Falcon’s Vision AR Headset, the GameSuite gameplay ecosystem, Suspended Theater, SpectraVerse, ONIX Theatre, and AEONXP technology. In the course of developing the above projects and technology, multiple patents have been granted in more than a dozen countries. Below are links to short video presentations for just a few of the just named projects.


(point & click, point & click on link)

https://vimeo.com/227291407  “IMG” Worlds of Adventure, Dubai –

https://vimeo.com/372003261 – Halo: Outpost Discovery

https://vimeo.com/477784289 – Gamesuite ecosystem

https://vimeo.com/111864378 – Suspended Theatre

                Current projects:

As shown in the first chart below, Falcon’s Creative is finalizing the full concept master plans for five “third party” theme parks, estimated to amount to $655M of goods and services, in addition to about $100M relative to the JV with Melia’.  Applying the estimated gross margin of 30-35% to services and 17-18% to hardware, the total gross margin (at the midpoint) would be $158M. Based on the timeline shown on the chart just above, one fifth of that would be about $32M of annual gross margin generated for Falcon’s.

Not shown below, Falcon’s is also actively developing the pre-concept master plans for three unique theme parks, as well as the full concept design for nine specialty themed hotels, each of which can generate subsequent phases of design.

There is continuing support of Qiddiya, one of a series of giga-projects in Saudi Arabia, designed to consist of 367 square kilometers of family friendly theme parks, sports arenas (suitable for int’l competitions), academies for sports and the arts, concert and entertainment venues, motorsport racetracks and nature/environmental adventure activities. To date, for Qiddia Falcon’s Creative has led the design of 26 distinct entertainment assets ranging from hotels to theme parks. This has also included the design of the region’s largest water theme park, spanning 252,000 square meters and combining 22 wet and dry attractions alongside competition level water sports facilities. Falcon’s is also now supporting the project in the role of creative guardian as construction advances.

Creative (as a segment of Falcon’s Beyond) is operating, safe to say, with a substantial positive cash flow. Subject to the timing of individual projects, the Creative segment of daily activities seems capable of generating something like $25-35MM of annual EBITDA. That should contribute substantially to the asset building brick and mortar activities with Melia’ and otherwise, as well as support the asset light activities of Falcon’s Brands.

Falcon’s Beyond Destination is currently comprised of the hotel and Katmandu theme park in Mallorca, with three 50-50 projects under way. The hotels, contributed by Melia’ and the Katmandu parks built and financed by Falcon’s, will be part of the 50-50 joint venture. Falcon’s Central the adjacent retail, dining and entertainment venue will be built, operated and 100% owned by Falcon’s.

The model for the Falcon’s Destination/Melia’ Joint Venture was the Sol Katmandu Park and Resort in Mallorca, Spain, the park having been established in 2007, whose performance improved substantially after merging with the adjacent Melia’ hotel in 2012, complemented by the Falcon’s designed Katmandu compact theme park.  The design of this combined “entertainment with rooms” destination makes it convenient for guests to visit throughout the day and evening. Falcon’s developed stories, characters and environments to transport guests to Katmandu via immersive theming from entry through queues into each attraction.  The theme park, prior to COVID, averaged over 240,000 visitors per year, generated in only seven months per year. The hotel’s average occupancy was 77%, 6 points better than non-Katmandu hotels in Mallorca, with an average room rate of $154, 11% higher than non-Katmandu rooms.

The improvement in Mallorca, and the working relationship between Falcon’s Chairman, Scott Demerau, with Melia’ encouraged the formation of the JV. Melia’ has more than 350 resort and beach destinations across over 40 countries. Scott Demerau’s team has the theme park operating experience, and Cecil Magpuri leads the Creative production of a leading-edge entertainment experience. Melia’, by contributing an existing hotel to the JV, is betting that their 50% of the theme park (which Falcon’s is building) plus their 50% of the improved hotel cash flow, with higher room rates and occupancy, plus more business at other properties they may own in the area, will be more than their current cash flow from the hotel.  Falcon’s is getting access to premium resort real estate owned by Melia’ that would be largely untouchable at today’s values. Both Melia’ and Falcon’s will benefit from Melia’s long term banking relationships, in addition to Falcon’s new access to US capital markets.

As the charts below from the Investor Presentation show: Within the joint venture are the Mallorca Sol Hotel and Katmandu theme park, plus the hotels and theme parks in Punta Cana (Dominican Republic, Tenerife (Canary Islands) and Playa del Carmen (Mexico).  It should be noted that all are year-round tourist locations, 3.5M annually in Punta Cana, 8.4M in Tenerife and 12.5M in Playa del Carmen (excluding cruise ship visitors).

By mid-2025 the joint venture expects to own and operate four destination resorts with over 1,900 hotel rooms, four theme parks, and three 100% owned retail districts. As shown below, the capitalized value of this brick-and-mortar portfolio could approximate the initial valuation of the deal, possibly more. Primary monetization of these developments will consist of hotel bookings, entertainment ticket sales, retail & food & beverage sales, and management fees.

Joint Venture Economics

The Joint Venture, once all three new locations are opened and ramped, is expected to generate, after capex, about $125M of annual Cash Flow. Falcon Beyond’s 50% share would be about $63M, as shown in the chart below. We note the reference on the left “we expect to take advantage of Melia’ longstanding banking relationship to secure attractive banking terms.” Leverage is calculated at 40-45% loan-value, which generates a 37% pretax return on equity for Falcon’s Beyond. The calculation, as shown in the Investor Presentation is just below:

              Falcon Central – the concept and the economics

Falcon’s Central is the “signature” venue at the center of the theme park, merging retail, dining and entertainment. Guests are exposed to a multitude of entertainment experiences, amenities, IP content and merchandise. Dining experiences are offered both from local restaurants as well as newly developed concepts. The shopping district offers both local and global retailers showcasing varied IP-infused merchandise. Attractions featured at Falcon’s Central will be VQUARIUM, a virtual adventure, STORY HUB, an immersive location-based entertainment experience, CURIOSITY PLAYGROUND, an experiential edutainment venue, and GAMEHUB, an immersive video game experience.


The chart, as presented in the Investor Presentation, shows Falcon Central’s Cash Flow, after capex and interest, from the three new locations amounting to $44M, generating a 36% pre-tax return on equity. Once again, as with the theme park development, Melia’ banking relationships are expected to be instrumental (Borrowing $96M out of $217M initial investment).

      Total Hard Asset EBITDA Generation (and capitalized Value)– at  mid-’25 Run Rate

As described in the discussion above:

When the three new locations are completely opened by mid-2025, the Joint Venture with Melia’ is expected to be annualizing (for Falcon’s Beyond) EBITDA at $73M, before maintenance capex of $5.5M. Falcon’s Central (100% owned) is expected to be annualizing at $53M before maintenance capex of $5M capex.  The EBITDA annualized run rate on “hard assets”, after maintenance capex, is therefore expected to be about $118M. The difference between that and the $146-$156M of total EBITDA is expected to be generated by Falcon’s Creative, which appears reasonable based on the backlog of projects and the commensurate margins.

Capitalized Asset Value

Cash flow generation obviously has a value, depending on the reliability of the cash flow, and the cap rate provided by capital markets. The following table shows the calculation behind an asset value of $954M to $1.451B, depending on cap rate.

Falcon’s Brands – Last but Far from Least – the Asset Light “Kicker”

Falcon’s Brands will deploy and monetize owned and partnered brands. The unique brand expander strategy compresses the normal timeline for brand monetization, will do so across multiple venues, and include licensing agreements across outside channels.

This effort is led by both internal talent, and outside advisors including Board members. It will include multi-media story telling by way of social media, films, books, comics, gaming, VR, apps, music, podcasts, audio books, etc. Consumer products will also be developed, enabling rapid monetization of IP with minimal investment. FBY’s technical expertise will align with prominent global partners to distribute toys, games, apparel, collectables, electronics and published goods.

Distribution can take place through brick and mortal retailers, online direct to consumer, as well as in 3rd party marketplaces.  A variety of characters and universes are already in the library of brands within Falcon’s.

A number of strategic partnerships with leading developers and distributors of brands are already in place to jumpstart this effort. The synergistic effect of FBY’s three divisions should be noted, since each project done well by a particular segment builds long term value for the others.

Falcon’s Beyond Brands is expected to be, over the long term,   a one third contributor to total corporate EBITDA, equal to each of Creative and Destinations.


The following chart from the Investor Presentation provides a summary of cash coming and going between the Business Combination (estimated at year end ’22) and mid-2025. It shows cash provided by the SPAC ($222M), Private Placement from Falcon’s affiliate ($60M), Secured Term Debt of Falcon’s Central ($96M) and Cash Flow from Operations (Creative and Destinations) ($110M). Outflow includes Transaction expenses ($46M), Falcon’s contributions to JV ($161M), Falcon’s Central capex ($ 217M). There is a $63M “cushion” to allow for SPAC redemptions.

Adjustments to financial plans, for better or worse, are always a possibility. Good news is not of concern to investors but, in consideration of possible short-term disappointment:  should redemptions amount to more than expected, projects open late or do less well than expected, or financing not be available as planned, the positive current operating cash flow from Creative would allow for adjustments in timing, rather than elimination, of future projects. The predictable positive operating run rate would also buy time to arrange alternative financing for brick-and-mortar projects. While short-term results could be affected, longer term plans would (hopefully) remain intact.


The following chart summarizes the transaction. We have written before, and above, about the improvements in comparison to a typical SPAC structure. Most notable is (1) The starting valuation is a modest 6.7x projected annualized EBITDA in about 2.5 years.  (2) The current operating cash is presumably positive. (3) Principals within the company to be purchased are staying, owning over 80% of the new company, and investing (through an affiliate) an additional $60M. (4) Sponsors are giving up 20% of their inexpensive shares. (5) SPAC investors remaining will receive an 8% preferred stock for half their shares. (5) Earnout shares will not be issued for at least a year and when the stock is $20, $25, and $30/share. (6) Sponsor, affiliates and board members are well equipped to provide strategic guidance.


The charts below, from the Investor Presentation, show how reasonably valued Falcon’s is, based on the growth rate, EBITDA margins, and mid-2025 projected EBITDA. These numbers, to us, are mostly illustrative of the substantial re-rating possibilities for Falcon’s stock if and when they have produced the results as projected.

CONCLUSION: As provided above

We have more to learn, from the S-4 when filed and our further research, but it seems at this point that success is more a question of how much and when, rather than if. The professionals at Falcon’s Beyond are not being asked to do anything they haven’t done before. A billion dollars is a significant starting valuation, but the ROI on over $200M of SPAC proceeds, invested productively in brick & mortar projects, and the earnings power at the Creative division should support a good portion of that.  Moreover, the value of Falcon’s 50% portion of just the first few projects with Melia’ Hotels could approximate the initial $1B valuation.  Longer term, more Destination projects with Melia’ and others, expanded Creative business with Qiddiya and others, and Brands could combine to double the projected mid-2025 EBITDA of $150M by ’27-’28. It is a crucial consideration that current Creative operations are cash flow positive, available for the development of brick & mortar assets. This feature, along with the banking relationships of Melia’, should allow for growth as planned, even without a broad vote of confidence from current FZT shareholders. The possibility of $150M annualized EBITDA in only about 2.5 years, combined with the potential to build billions of value attached to brick-and-mortar assets makes the current $1B starting point appear reasonable. Precise timing of events is always uncertain, and the degree of success cannot be assured, but the intellectual, physical and financial assets seem to be in place. While, per Yogi Berra, “Predictions are always difficult, especially about the future.”, uniquely positioned Falcon’s Beyond provides an unusually attractive investment proposition.

Roger Lipton














We have written periodically about this previously very hot segment, and our readers can use the SEARCH function on our Home Page to review our commentary. Suffice to say that great care should be employed while investing within this segment, not only when acquisitions have already been consummated but while the transaction is pending and even at the original IPO. At this point, the bloom is definitely coming off the SPAC rose.  The SPAC index, after rising from just over 500 in early November ’20 to almost 950 by mid-February ’21, has declined to 720 as this has written.

Fortunately, there has not been too much money lost (yet) for investors in the restaurant related SPAC space. There are eight SPAC transactions that have been in play over the last two years, only one of which (OPES/BurgerFi) has consummated a transaction. This means that shareholders who invested in the IPOs still have the opportunity to get their funds back if they don’t like the suggested transaction, and that could yet happen. Should that be the case, the Sponsors would lose their organizational investment, anywhere from a few hundred thousand to a few million dollars, but at least the public will not have been burned.

Of the seven SPACs that have not yet consummated a business combination, one (FST) has proposed an acquisition. Four sponsorship groups have raised their funds and are screening potential acquisitions, and two are trying to complete their IPOS. The following is a brief summary of each current situation, with an equally concise description of the Sponsors and management teams. This discussion is not designed to be exhaustive but rather to remind us who is involved in each situation. I say to the principals of the SPACs described below: please forgive me if I have not, in my attempt to be concise,  completely described your professional credentials. Each of you has accomplished far more than I have, too briefly, referenced below.

It is interesting that two of the six restaurant related SPACs that have been funded, and one of the two yet to be funded, have been spawned by entrepreneurs affiliated with &vest, a brand building group which, among other things, created Washington, DC based &Pizza. Doug Jacob, Steve Salis, Sandy Beall, Michael Lastoria, et.al., seem to have a good instinct for knowing how a great deal of money can be made.

😊 That said, I suspect that all of the Sponsors, as described below, will find that it takes a lot longer to cash out than they might have hoped. It’s one thing to ride the wave. It’s another to get to the beach, put  your feet up and enjoy a beer.

The One Consummated Transaction

BurgerFi (BFI) is the only publicly held restaurant company that has been spawned by a SPAC, OPES Acquisition Corp., when $115M was raised in March ’18 by a Sponsorship group out of Canada. After an acquisition search over two years, the Canadian group passed part of their sponsorship stake and the remaining process to a new Sponsorship group led by Florida based real estate entrepreneur, Ophir Sternberg. By that time, in the course of several time extensions, over half of the originally raised funds had been redeemed. More funds were raised, and the BurgerFi transaction was completed in December, 2020. We have described BFI on this website before, including operational details so far reported by the new Company. Our reports can be accessed with the SEARCH function on this website. BFI has traded above $16/share several times since the closing in December, but is now trading between $10-$11/share. Since there has been little news of note, other than management additions and first quarter, ’21 results, still inhibited in the waning days of Covid-19, we attribute the lackluster price action largely to reduced interest in SPACs in general.

The One Proposed Business Combination that is Pending

FAST Acquisition Corp (FST) raised $200M in August, 2020, with the sale of units consisting of one share and one-half a warrant . The Co-Chief Executive Officers were originally Sandy Beall (of Ruby Tuesday fame) and Doug Jacob (a brand builder and co-founder of &Pizza). Kevin Reddy, a restaurant veteran whose career has included executive positions at McDonald’s & Noodles, among many others, was Chairman.  The transaction proposed, with a preliminary proxy in process with the SEC, is the acquisition of Tilman Fertitta’s hospitality (restaurants, hotels & gaming) empire. This is a very large transaction ($6B of revenues) relative to the original ($200M) IPO, so $1.25B was raised privately (PIPE) to reduce Fertitta’s existing debt. The original Sponsor, Doug Jacob, along with his proposed executive team, have stepped aside in favor of Fertitta’s group. Fertitta will own 59% of the surviving Company, the PIPE shareholders will own 34.6%, the IPO shareholders 5.6% and Doug Jacob a little less than 1%. Jacob has obviously decided that he would rather own a very small sliver of a much bigger situation, handing over the corporate keys to an experienced entrepreneur, rather than having to manage the process himself. The good news is that the restaurant and hospitality industry is opening up as the pandemic runs its course, and the rebound in Las Vegas is especially apparent. Based on Fertitta’s empire returning to 2019 revenue levels, the case is made that profit margins will be improved as a result of efficiencies implemented during the Covid-19 pandemic. FST, post the merger, looks to have substantial upside if EBITDA and profits are generated as suggested. Since the deal was rumored in mid-January, FST has traded from about $10.25 to $12-13/share where it has fluctuated the last couple of months as presentations are made and papers are filed. Though the proxy material is no doubt complex, and the closing could yet take a few months, with FST trading at better than a 20% premium to the IPO price, it appears that shareholders will bless the deal. Considering Fertitta’s deal driven agenda, as demonstrated over thirty years in the public eye, FST will be an interesting situation to follow.

Four SPACs with Funds Raised

Tastemaker Acquisition Corp. (TMKRU) raised $276M on 1/8/21 with the sale of units consisting of one share and one-half a warrant. Tastemaker Sponsor LLC is owned by Pace, Phorzheimer and Golkin, further described as follows. The management team is led by Co-CEOs, Dave Pace and Andy Phorzheimer. Greg Golkin is President and Chris Bradley is CFO. Pace has been Board Chairman of Red Robin (RRGB), CEO of Jamba, Inc.(JMBA) as well as with Bloomin’ Brands (BLMN), Starbucks (SBUX), Yum Brands (YUM) and Pepsico  (PEP). Phorzheimer was co-founder of Barteca Holdings (operator of Bartaco Barcelona Wine Bar), which was sold to Del Frisco’s For $325M in June, 2018. He is currently an independent Board member at brands owned by L. Catterton, Brentwood Associates and Rosser Capital. Golkin has been Managing Partner at Kitchen Fund, an investor in growth restaurant brands, and an investor for many years in a variety of industries. Bradley has been a Managing Director at Mistral Equity Partners since 2008, previously an investment banker at Banc of America Securities. He is also CFO of Haymaker II (HYAC), a SPAC intending to acquire ARKO Holdings, Ltd., a convenience store operator, and previously served as CFO of Haymaker I, which combined with OneSpaWorld Holdings (OSW) in March, 2019. Hal Rosser, Founder and Managing Partner of Rosser Capital Partners, will serve as non-executive Chairman. There are highly qualified Directors, including Rick Federico, Starlette Johnson, and Andy Heyer. There has been no proposed business combination yet. The units trade at $10.00, the same as the issue price.

Bite Acquisition Corp (BITE) raised $200M on 2/12/21 with the sale of units consisting of one share of common stock and one-half a warrant. Bite’s Sponsor is Smart Dine, LLC, which is owned by various executives and directors of BITE, including Gomez, A.A. Gonzalez, Warschawski and J.M. Bernal, described further below. Rafael Felipe de Jesus Aguirre Gomez is Chairman, with over 35 years in food and beverage operations as Chairman of Mexican based Mesa Corporation. Alberto Ardura Gonzalez, CEO, has more than 35 years of experience in finance, with Merrill Lynch Mexico, Deutsche Bank in NYC as head of Latin America Capital Markets and Nomura Securities. CFO of BITE, Axel Warschawski has been in finance and private equity for over 15 years, as a VP for Mesa since 2013. Director nominees include Julia Stewart, Randall Hiatt, Joseph Essa and Juan M. Gonzalez Bernal, all with impressive credentials. No business combination has yet been proposed. BITEU currently trades at $9.88 per unit

USHG Acquisition Corp. (HUGS/U) raised $287M on 2/24/21 with the sale of units consisting of one share and one-third of a warrant.    HUGS’ Sponsor is USHG Investments, LLC,  an affiliate of Union Square Hospitality Group, LLC, which was founded and is still led by the legendary Danny Meyer. Within HUGS, certain of the directors, officers, and their affiliates own a portion of the Sponsor. The management team is led by Chairman, Danny Meyer. The CEO is Adam Sokoloff, who since 2019 has been the Managing Partner of merchant banking firm, Asgard Capital Partners. Prior to that, he spent several decades in investment banking activities, with firms including Bear Stearns, Drexel Burnham, Kidder Peabody and Leonard Green. Tiffany Daniel, CFO at HUGS, was a VP at Cole Haan, before that a VP at Tapestry, before that with other fashion brands as well as with private equity firm, Bruckmann, Rosser, Sherrill & CO. Directors include J. Kristopher Galashan, Lisa Skeete Tatum, Mark Leavitt, Walter Robb, Randy Garutti, Heidi Messer, and Robert K. Steele, all highly credentialed. No business combination has yet been proposed. HUGS/U currently trades at $10.09 per unit.

FAST Acquisition Corp. II (FZT/U) raised $230M on 3/15/21. Doug Jacob had so much fun taking FAST I public, he followed it up with another, in fact a couple of others. While Jacob is the founder of FAST II, Garrett Schreiber is the Sponsor and CFO of FAST II. We note that Mr. Schreiber, at the ripe old age of thirty, was CFO of FST (above), is also CFO of Velocity Acquisition Corp (referred to below), joined RBC Capital Markets as an investment banking analyst in 2014 (obviously at the age of about 23), so is obviously very talented.  Jacob and Schreiber are joined once again by Sandy Beall (as CEO), Eugene Remm (as Chief Brand Officer), Michael Lastoria (CEO of &Pizza) and Steve Kassin, all principals of &vest, which is referred to as a “hybrid investment fund sponsor/creative agency”. Separately, we note that this group has a third SPAC, selling $230M in February, 2021 in technology oriented Velocity Acquisition Corp. In addition, Kevin Reddy follows his involvement at FAST by being Chairman of the Board for FAST II. There are quite a few other individuals brought in by Jacob, all proven Brand builders in their previous affiliations. The acquisition search is aimed at hospitality in general (i.e. restaurants, hotels, entertainment, consumer brands) and associated technology, differentiated products and/or services with high revenue growth and at least $40 million of EBITDA. Again, the above description of the people and the strategy is just scratching the surface. We will all learn more over time. The IPO units (FZT/U) is trading at $9.98.

Two SPACS Not Yet Funded

Sizzle Acquisition Corp (SZZLU) – Filed on March 11, 2021 a registration statement to raise $143M, by way of the sale of units, consisting of one share of common stock and one-half a warrant. The Sponsor is VO Sponsor, LLC, owned by Steve Salis and Jamie Karson, described further below. Chairman and CEO is Steve Salis, with extensive experience in restaurants and hospitality in Washington, DC. Among other things, Salis was co-founder of &pizza in July 2011 and was CEO from 7/11 to 3/15. Jamie Karson is Non-Executive Vice Chairman and has worked closely with Salis in recent years. From ’01 to ’08 he was CEO and Chairman of the Board of Steve Madden, prior to that CEO and COO of Think Pink, which operated 5 Pinkberry restaurants in Connecticut. Grace Park, CFO, joined Salis Holdings in July 2020, having been Corporate Controller at Five Guys from 2016 to 2020. Prior to that she was with KPMG and Nestle.  Once SZZLU is funded, Daniel Lee will become Head of Business and Corporate Development. Mr. Lee has worked with Steve Salis, since 2018, before that in business planning and finance at a variety of firms. Also following the SZZLU funding, Karen Kelley, Warren Thompson, and David Perlin will become directors, all with high quality credentials. In addition: Carolyn Trabuco, Geovannie Concepcion, and Rick Camac will serve as strategic advisors. We have no knowledge of the currently anticipated funding date.

Do It Again Corp (DOITU) – Filed on March 2, 2021 a registration statement to raise $143M, by way of the sale of units, consisting of one share of common tock and one-third of a warrant. The Sponsor is Do It Again Sponsor LLC, of which Clifford Hudson is currently the sole owner. CEO and Chairman is Hudson, with Kathy Taylor as President and Scott McKinney as CFO. Cliff Hudson spent 35 years building Sonic Corp., selling SONC to Inspire Brands for $2.3B in December, 2018. Kathy Taylor was EVP and General Counsel at Thrifty Car Rental, leading to its sale to Chrysler Corporation. At that point, she and others purchased National Car Rental from General Motors, which was sold to Auto Nation. She has been involved in ownership and operation of a variety of other successful business, and is the former mayor of Tulsa, Oklahoma. Scott McKinney began his career as an investment banking analyst at AG Edwards & Sons and has completed over $20B of transactions in the retail space, working within firms including Barclays Capital and Lehman Brothers. Director Nominees include Sid Feltenstein, a very highly regarded veteran of restaurant operations and franchising, Kate Lavelle, also with extensive restaurant experience, and Scott McLain, with over 25 years of restaurant experience, including his stint as CFO at Sonic Corp.

CONCLUSION: Provided at the beginning of this article

Roger Lipton