Boxed Goes Public Via SPAC Transaction
Boxed Valued at Roughly $900 Million
Boxed, an online retail company, is going public via a special-purpose acquisition (SPAC) transaction. The deal with Seven Oaks Acquisition Corp. (SVOK) values Boxed at close to $900 million and gives it access to about $334 million in cash.
Boxed, founded in 2013, delivers groceries and bulk items to consumers and businesses around the country. Proceeds from the transaction will be used to capitalize on the huge increase in demand for ecommerce resulting from the pandemic. Existing investors in Boxed are rolling over their investments into the new public company.
Boxed Plans for Growth
Seven Oaks looked at acquiring about 70 companies over the past six months. Ultimately it chose Boxed because of the way the company utilizes software and robotics in its fulfillment centers.
Profitability has eluded Boxed, but Seven Oaks believes its software, advertising, and delivery services will help it attain profitability in the coming years. While Boxed’s sales growth is lower than at the start of the pandemic, the firm does expect to continue adding customers. The company is also betting that deliveries to businesses will be more profitable than to households. Sales to customers such as United Airlines (UAL) fell by half during the pandemic, but this arm of Boxed’s business is beginning to grow again.
Competition for Boxed
Boxed is also facing intense competition from the likes of Instacart, DoorDash (DASH), and Uber (UBER), which could hurt its growth prospects. Instacart is also going after deliveries to businesses, and recently launched a thirty-minute delivery service. Meanwhile, Uber Eats is starting to distribute products other than food. Most of Boxed’s rivals have also struggled to reach profitability due to high to labor and shipping costs. It is not clear if Boxed will fare any better.
Now that Boxed is a public company, investors will be eager to see if its software, technology, and push into the business market will be enough to stave off competition in the delivery space.
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