A blank-check company backed by former NBA star Shaquille O'Neal has backed out from a merger deal with HyperloopTT, the developer of the only hyperloop system in the U.S, according to a LinkedIn post by Bibop Gresta, a cofounder of HyperloopTT, today (Feb. 13). The failed deal is a casualty of a challengiong market for initial public offerings.
HyperloopTT entered an agreement in November 2022 to go public on the Nasdaq through a reverse merger with Forest Road Acquisition Corp II, a special-purpose acquisition company (SPAC), that would value the startup at $600 million. SPACs are publicly traded companies created for the sole purpose of acquiring promising private firms, so they are also known as blank-check companies.
Forest Road II was formed in 2020 targeting startups in media, telecom and tech industries. The firm is headed by former Disney executives Kevin Mayer and Tom Staggs. Its backers include O’Neal and Martin Luther King III, the oldest son of civil rights activist Martin Luther King Jr. The SPAC was at one point in talks over a possible reverse merger with OnlyFans but eventually walked away from the deal over concerns about the site’s adult content.
HyperloopTT is a startup based in Los Angeles and France developing vacuum tube-based train system that can transport people at the speed of airplanes just above the surface. It has built viable prototypes in France, Germany and the Middle East, but its most ambitious project is in the U.S., a 300-mile hyperloop system connecting Chicago, Cleveland and Pittsburgh. The project passed a feasibility study in 2019 but has struggled to move forward due to funding challenges. According to the feasibility study, the project will cost between $25 billion and $30 billion and HyperloopTT hopes to find outside investors to fund the construction.