Virgin Galactic merges with Social Capital Hedosophia eyeing NY stock exchange listing

The merger with SCH is the first step towards first trading of of Virgin Galactic shares in the NYSE

Eva González New York (USA), 9 July, 2019

Virgin Galactic (VG) and Social Capital Hedosophia (SCH), a public investment vehicle sponsored by Social Capital and Hedosophia, announced that the boards of directors of each company have approved a definitive agreement under which VG and SCH will merge.
The current shareholders of SCH are expected to own up to approximately 49% of the combined company.

Upon closing of the transaction, which is expected to be carried out in the second half of 2019, VG will be introduced as the first and only publicly traded commercial human spaceflight company.

The deal with SCH is still subject to approval by SCH’s shareholders and other customary closing conditions.
As part of this transaction, the existing management team of VG will remain in place following the close of the transaction with George T. Whitesides remaining as CEO, while a new Board, comprised of seven directors, will be augmented by the addition of Chamath Palihapitiya, as Chairman, and Adam Bain, both of whom are committed to the success of VG.

The Board of VG believes that the additional capital provided by the merger with SCH will provide the company with the support needed to reach commercialization.

First step to NY Stock Exchange listing

Sir Richard Branson, Founder of VG, said: “Great progress in our test flight program means that we are on track for our beautiful spaceship to begin commercial service. By embarking on this new chapter, at this advanced point in Virgin Galactic’s development, we can open space to more investors and in doing so, open space to thousands of new astronauts. We are at the dawn of a new space age, with huge potential to improve and sustain life on Earth. I am delighted that SCH has decided to become such an important part of our amazing journey. They share our dreams and together we will make them reality.”

Virgin Galactic’s Carrier Aircraft VMS Eve and VSS Unity Take to the Skies. © Virgin Galactic

“Today, we became more formidable still, by announcing that Virgin Galactic, along with its sister manufacturing organisation, The Spaceship Company, has taken a huge step towards becoming the very first publicly listed human spaceflight company and therefore available to equity investors,” Branson added and continued, “This achievement is being made possible by joining forces with a New York Stock Exchange-listed investment vehicle, which has many underlying investors, but led by two visionary business leaders, Chamath Palihapitiya and Adam Bain. Having got to know Chamath and Adam over the past few months I have no doubt that we will be better together and am delighted they are becoming such important partners on our amazing journey. Together we will make our dreams reality.”

Aditional information on the merger

On July 9, 2019, SCH (NYSE: IPOA) entered into a definitive agreement to combine with VG with a combination of stock and cash financing. The merged company will have an anticipated initial enterprise value of $1.5 billion implying a 2.5x multiple of 2023 projected revenue and a 5.5x multiple of 2023 projected EBITDA as commercial operations are expected to achieve scale.

Chamath Palihapitiya (former Senior Executive at facebook and Founder and CEO of Social Capital Hedosophia). Photo attribution tasti-sc CC BY-SA 4.0

After the completion of the transaction, the majority of the net cash from SCH’s trust is expected to be held on VG’s balance sheet to fund operations and support continued growth.
In connection with the deal, SCH’s founder has agreed to invest an additional $100 million at $10.00 per share at completion of the transaction.

The selling equity owners of VG will receive a total consideration of $1.3Bn, including inclus$1.0 Bn of common stock of the combined company (valued at $10.00 per share) and up to $300 million in cash consideration.

Assuming no redemptions by the public shareholders of SCH, current VG shareholders and current holders of SCH will hold approximately 51% and 49% of the combined company, respectively, at closing.

The new funds from SCH add to the more than $1Bn that has been invested in VG since its inception in 2004.

George Whitesides, CEO of VG, explained:”This transaction represents the next step of our exciting journey. We believe it will offer us the financial flexibility to build a thriving commercial service and invest appropriately for the future.”

Chamath Palihapitiya, former Senior Executve at Facebook and Founder and CEO of Social Capital Hedosophia, underscored: “It is a privilege to partner with Sir Richard Branson, a once-in-a-generation visionary, to bring the reality of commercial spaceflight to the world. We are confident that VG is light years ahead of the competition. It is backed by an exciting business model and an uncompromising commitment to safety and customer satisfaction. I cannot wait to take my first trip to space and become an astronaut.”

Some reasons why VG is to become public

“Opening Virgin Galactic to further external investment has been on the cards for a while. Great progress in our test flight programme means that the remaining hurdles, before our beautiful spaceship starts a full commercial service, are steadily being cleared. Having sadly had to pull away from an investment by Saudi Arabia after the murder of journalist Jamal Khashoggi, and then having demonstrated the repeatability our full flight profile with two crewed spaceflights, we had an opportunity to rethink our investment plans,” Richard Branson explained.

Image over the headline.- Richard Branson with Virgin Galactic and The Spaceship Company CEO, George Whitesides. ©Virgin Galactic

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