Digital healthcare giant Babylon enters into $4.2bn SPAC deal

Babylon, a digital-first healthcare company founded in 2013, today entered into a definitive merger agreement with SPAC Alkuri Global that will see the combined company trade on Nasdaq.

The transaction, expected to close in the second half of 2021, reflects an initial pro forma equity value of $4.2bn and an enterprise value of $3.6bn.

This includes an estimated $575m in gross proceeds, with a $345m contribution from Alkuri Global’s trust account and a $230m private placement primarily funded from external institutional investors. Such investors include AMF Pensionsförsäkring, Sectoral Asset Management and Swedbank Robur, with strategic investor Palantir, at $10.00 per share.

Existing Babylon shareholders will roll 100 per cent of their equity into the combined company, owning approximately 84 per cent of the company at closing.

Babylon will retain its management team and an Alkuri Global representative will join its board of directors. Dr Ali Para, founder of Babylon, will remain as CEO and said going public is “another step” to make the health care sector “digital-first and prevention-first”.

Babylon’s services include Babylon 360, a digital care service, and Babylon Cloud Services, a suite of digital self-care tools for patients and clinicians. It operates in the United States, Canada, Europe, Africa and 13 countries in Asia with 24m users.

Babylon also announced it intends to acquire the remaining equity stake it does not already own in Higi, a consumer health engagement company. Major investors in Higi have agreed to accept shares in lieu of cash consideration, if Babylon exercises its option. Babylon has said this will reduce its cash needs by approximately $40m.