Will NextGen Acquisition II (NASDAQ: NGCA) merge with Virgin Orbit?

A potential reverse merger between SPAC company NextGen Acquisition II (NASDAQ:NGCA) and Richard Bransons Virgin Orbit first came to light last week after a Sky News report. The report details Sir Richard Branson is in advanced talks with SPAC company NGCA to take the orbital launch service company public. The transaction values Virgin Orbit at roughly $3 Billion according to Sky News sources. In 2019, Branson followed a similar path to public offering with Virgin Galactic merging with Billionaire Chamath Palihapitiya’s SPAC company Social Capital Hedosophia (NYSE:IPOA). This article will breakdown everything you need to know about the Virgin Orbit and NGCA merger.

Key details of rumoured merger

  • Virgin Orbit has been seeking a suitable SPAC proposition over the past few months and has engaged in talks with multiple potential partners according to the report.
  • The merger is set to value Bransons launch service at US$3 Billion. Interestingly, this valuation is double the enterprise value of Branson’s Virgin Galactic merger.
  • The key players in the rumoured merger are Virgin Orbit who is being advised by Credit Suisse and Liontree Advisors, while Goldman is acting for NextGen on the merger talks according to the report.
  • At this stage neither company or the rumoured advisory panel has released any further information regarding the merger.
  • RocketLabs, another launch service competing with Virgin Orbit, announced in March their intentions to merge with SPAC company Vector Acquisition Corp (NASDAQ: VACQ). This transaction is expected to value the company at $4.1 Billion, see our article here.

Why the Virgin orbit merger would be a big deal

NextGen Acquisition II (NASDAQ: NGCA) is starting to gain momentum with investors speculating the likelihood of the merger coming to fruition. The SPAC was trading as low as $9.63 in May and is currently balancing around the $10.30 mark at current. With the success of Virgin Galactic stock (NYSE:SPCE), which is now trading above $50 a share we can see why investors would be looking to get in early.

The proposed merger would see Virgin Orbit trade publicly on the US market alongside its competition RocketLab. However, the potential merger is only a rumour at this stage. We will wait and see over the next few weeks if Virgin Galactic announce the highly anticipated merger.

New York, USA – 15 February 2021: Virgin Orbit website in browser with company logo, Illustrative Editorial

The current climate of SPAC mergers on Wallstreet

Over the past 6 months, the initial wave of bullish sentiment towards SPAC companies has faded. In March this year, we saw a common theme post-merger, with the combined companies trading under their initial PIPE price. However, more recently we have seen a second wind of optimism with companies such as Mirion Technologies, Lucid Motors, Grab and The BeachBody Company gaining momentum from the resurgence. With NGCA already peaking interest on rumoured talks, we can predict investors will be eyeing off the opportunity to buy NGCA prior to the completion of the merger.

Summary – NGCA Virgin Orbit merger

In summary, the rumoured merger has caught the attention of investors on Wallstreet. With the success of SPCE alongside other direct competitors such as RocketLabs taking a similar trajectory, we can expect further interest over the next few weeks. However,at this stage the merger is only speculation and we can expect higher volatility upon further information from either party.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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