United Wholesale Mortgage said on Wednesday that it would go public by merging with a blank-check company, Gores Holdings IV, in a transaction that would value lender at roughly $16.1 billion.
Gores Holdings IV is a special-purpose-acquisition company, or SPAC. The company is sponsored by an affiliate of Gores Group, a private-equity firm founded in 1987 by Alec Gores.
Shares of the Beverly Hills, Calif., company at last check were down 2.2% at $10.57. They have traded on Wednesday up as much as 5.4%.
United Wholesale said it would retain about 94% ownership of the combined company and would get about $425 million of cash held in Gores's trust account along with $500 million from a private placement.
Current management, led by President and Chief Executive Mat Ishbia, will continue to lead the business. The merger is expected to close in the fourth quarter.
Based in Pontiac, Mich., United Wholesale said it's the largest wholesale mortgage originator in the U.S. with nearly 7,000 employees.
Once the deal is completed, the combined company will operate under the United Wholesale Mortgage name and be listed on Nasdaq under the ticker symbol UWMC.
United Wholesale Mortgage said it will be the largest business combination for a SPAC to date.
Mergers through SPACs, also known as blank-check companies, have been booming this year.
Issuers have taken in $91 billion in U.S.-listed IPOs, exceeding the $84 billion raised at this point in 2000, the previous record year, The Wall Street Journal reported, citing Dealogic data.
Roughly 44% of the volume, or $40 billion, has come from SPACs. That is more than four times the volume raised by these vehicles at this point in 2019 -- the previous record year.
Gores Group bought Hostess Brands in 2015 through its first SPAC and subsequently has purchased three additional companies using these vehicles ahead of the United Wholesale Mortgage deal, the Journal said.
Last week, XL Fleet, an electrified-powertrain-solutions company working with vehicles made by Ford (F) - Get Report, GM (GM) - Get Report and Isuzu, said it would go public through a reverse merger with a SPAC, Pivotal Investment. (PIC) - Get Report.