What’s a SPAC?

October 18, 2006 at 10:00 pm Leave a comment

Apparently, it stands for special purpose acquisition company (who knew?). And it’s how oldtimer tech trio Gil Amelio, Steve Wozniak and Ellen Hancock raised $172m to fund the acquisition of Jazz Semiconductor.

Kevin Maney’s USA Today column features a great and amusing interview with Gil Amelio that explains all the details. So what is a SPAC exactly? Explains Maney: “The idea is that you do an initial public offering before you have a business, then use the IPO proceeds to buy an existing company. Investors are basically betting on the management team and assuming the team will find and run a good business.”

The common link between the three is Apple. We all know Wozniak’s role; Gil Amelio had a dubious stint as CEO in the mid-late 90s, and brought in Ellen Hancock from a long tenure at IBM. Nevertheless, it seems an unlikely trio and, one that has not been in the public eye for a while – apart from Wozniak’s recent book promoting, including a slightly bizarre appearance on the Colbert Report.

Would you bet on this management team? Gil Amelio was ousted by Apple in 1997, and admits that he’s not the “rockstar” the company needed. Ellen Hancock was CEO of Exodus until it crashed and burned in 2001. And here’s how Maney describes Wozniak: “Since the 1980s, he’s basically been a member of the Lost Co-founders Club, along with Microsoft’s Paul Allen, onetime Beatle drummer Pete Best, and whoever Anheuser was.”

Maney characterizes the new venture as a “quest for redemption,” and doesn’t seem entirely sure they’ll pull it off. But if they do, “somebody write the script. Get Joe Pesci to play Amelio. He needs a comeback, too.”

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