Dan Loeb's Far Point urges investors to scrap Global Blue buyout

(Reuters) - Blank-check company Far Point Acquisition Corp FPAC.N on Thursday urged its shareholders to vote against the $2.6 billion deal to buy Global Blue after disruptions caused by the COVID-19 pandemic hit operations of the shopping tax refund firm.

The management of Far Point, a so-called special purpose acquisition company (SPAC) set up by activist investor Dan Loeb’s hedge fund Third Point LLC and ex-New York Stock Exchange President Thomas Farley, informed the board that it no longer supports the deal.

“There is a likelihood that Global Blue will lack sufficient capital and liquidity to fund its operations and satisfy its financial obligations following the closing of the transaction,” the company said in a statement.

A SPAC typically uses proceeds from its initial public offering, together with borrowed funds, to acquire companies that are usually privately held.

Separately, Global Blue said here in a regulatory filing that it would forge ahead with the deal.

“We believe that a majority of FPAC (Far Point) shareholders will recognize that the transaction will serve their interests as well as those of Global Blue,” it said.

Global Blue warned that rejecting the deal could lead to the liquidation of Far Point, according to its charter.

The company said it would strive to close the acquisition and is ready to work with Far Point to resolve any “reasonable” liquidity concerns once the deal closes.

Companies like Global Blue, which rely on international tourists who use its network to purchase luxury goods tax free, have felt the heat as travel restrictions and coronavirus-led lockdowns across the world keep people indoors.

The coronavirus crisis, which first hit China late last year before spreading to Europe and the United States, has kept shoppers at home and forced retailers to shut stores, resulting in a crushing halt to a decade of spectacular growth for high-end brands.

If the transaction, which was announced in January, is approved by its shareholders, Far Point said there remains a risk that one or more conditions to the deal closing would remain unsatisfied.

That would include a trigger of clauses such as the material adverse effect (MAE) and would raise concerns about Global Blue’s ability to meet New York Stock Exchange listing rules.

Switzerland-based Global Blue is currently owned by private equity firms Silver Lake and Partners Group.

(This story corrects paragraph 11 to clarify there remains a risk that one or more conditions to the deal closing would remain unsatisfied)

Reporting by C Nivedita and Abhishek Manikandan in Bengaluru; Editing by Supriya Kurane and Devika Syamnath