US auto parts maker Holley has agreed to merge with Empower, a publicly-traded special purpose acquisition company (SPAC), in a deal worth around $1.55 billion.

The deal will enable Holley to become a publicly listed company on the New York Stock Exchange (NYSE) under the new HLLY ticker symbol.

Holley is controlled by midmarket private equity firm Sentinel Capital Partners, which will continue as its largest shareholder upon closing of the merger. The auto parts manufacturer’s president and CEO Tom Tomlinson will continue to lead the combined entity.

Established in 1903, Holley is a designer, marketer, and manufacturer of automotive aftermarket products for cars and trucks.

For the fiscal year ended on 31 December 2020, Holley’s net sales are projected at $583 million.

Tom Tomlinson said: “Holley was built by automotive enthusiasts for automotive enthusiasts, a passionate and active market that spends on the products that they love. Today’s announcement marks the beginning of the next chapter of Holley’s journey to fuel our customers’ automotive passion.

“We’re excited to team up with Empower to deliver on our mission to bring innovation and inspiration to automotive enthusiasts. With our flexible capital structure, we expect to accelerate growth across existing products and channels, as well as continue to pursue attractive opportunities in adjacent categories, both organically through developing innovative new products and making strategic acquisitions.”

Estimated cash proceeds from the merger deal are expected to consist of Empower’s $250 million of cash in trust along with a $50 million forward purchase agreement from MidOcean Fund V.

Additionally, investors led by Wells Capital Management and Wasatch Global Investors have committed to injecting $240 million in the form of a private investment in public equity (PIPE), priced at $10 per share of Empower’s common stock.

The company anticipates using the proceeds from the deal to invest in Holley’s growth initiatives, considerably cut down existing debt, support marketing efforts, and give additional working capital.

The combined entity will have nearly $485 million of net debt on its consolidated balance sheet.

Matt Rubel – CEO of Empower said: “The performance automotive aftermarket is vibrant and growing, and enthusiasts of performance vehicles are amazingly engaged. Holley has become a leader in its digital and direct-to-consumer efforts, the fastest growing channels for the company.

“We’re also very excited about Holley’s emerging opportunities in connection with future technologies. Holley has the ability to grow organically and by making strategic acquisitions to broaden and diversify its market.”

The deal, which will be subject to the approval of the shareholders of the merging firms, certain regulatory approvals, and other customary closing conditions, is expected to close in Q2 2021.

  Empower, Holley, Matt Rubel, Sentinel Capital Partners, Tom Tomlinson