Introduction
We are blank check company incorporated on June 23, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination. Prior to executing the Business Combination Agreement (defined below), our efforts were limited to organizational activities, completion of our initial public offering and the evaluation of possible business
combinations. For information regarding our initial public offering, see Part II, Item 7 “Liquidity and Capital Resources.”
On February 15, 2021, we entered into a business combination agreement by and among Sandbridge, Project Olympus Merger Sub, Inc., a wholly owned subsidiary of Sandbridge (“Merger Sub”), and Owlet Baby Care Inc.
(“Owlet”) (the “Business Combination Agreement”). The business combination was unanimously approved by our board of directors on February 12, 2021. Owlet’s board of directors unanimously approved the business combination on February 13, 2021. If
the Business Combination Agreement is approved by Sandbridge’s stockholders and the transactions under the Business Combination Agreement are consummated, Merger Sub will merge with and into Owlet (the “Merger”), with Owlet surviving the Merger
as a wholly owned subsidiary of Sandbridge. In addition, upon the effectiveness of the proposed charter, Sandbridge will be renamed “Owlet, Inc.”
The Business Combination Agreement, related agreements and closing conditions are further described in Part II, Item 7 “Agreement for Business Combination.” Other than as specifically discussed herein, this report
does not assume the closing of the Merger.
We believe current market dynamics present an opportune moment for our sector focus. Prevailing trends prior to the emergence of the novel coronavirus have only grown more pronounced. Digital adoption has
meaningfully accelerated trends across an even broader cohort of customer demographics along with customer emphasis on sustainability, transparency, environmental awareness, and brand engagement and authenticity. The aforementioned trends,
concurrent with e-commerce’s ever-expanding importance, align with the domain expertise of our management team, directors and advisors. Our team identifies and partners with differentiated, purpose-driven brands that truly matter to and connect
with their customers and which are effectively attached to modern business models that drive engagement with relevant brand messaging and distribution at a time when many legacy distribution models are challenged.
Our team includes experienced industry operators and investors whose strategic skill-set can be employed to pursue significant value creation opportunities in this environment. We believe our team’s extended global
network of relationships with brand operators and owners, built over the course of decades of experience growing and managing iconic consumer brands, will help us identify attractive potential business combination targets, and that the collective
experience of our team will make us an attractive partner in the eyes of industry operators who value this competence and expertise.
The Sandbridge fund and the PIMCO private funds are members of our sponsor.
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Sandbridge Capital
Sandbridge Capital is a leading global consumer focused investment firm with a global network and deep sector expertise, targeting high-growth, market leading brands.
Sandbridge Capital’s primary target segments include modern consumer brands, disruptive consumer-based technologies, beauty and personal care, luxury, and health and wellness. Within these segments, Sandbridge
Capital targets importantly differentiated authentic brands whose purpose-driven brand messaging typically slots within its overarching industry thesis. These brands must be strongly positioned to become #1 or #2 in their market niches with
modern business models that enable them to seamlessly leverage online and offline convergence opportunities. Importantly, Sandbridge Capital’s thesis reflects the disruptive opportunity for innovative “2.0 brands” relative to the value erosion
experienced by structurally challenged retail and other legacy concepts.
Sandbridge Capital’s differentiated domain expertise and industry relationships attract high-quality proprietary global deal flow, facilitate nuanced and informed investment analysis, and position the firm to
implement strategies targeting transformative growth for the importantly differentiated brands with which it partners. Sandbridge Capital’s principals as a team have invested in 15 consumer brands, including Farfetch Ltd. (“Farfetch”), Mont Blanc
Global Group Holdings S.a.r.l. (“Rossignol”), The RealReal, Inc. (“RealReal”), Thom Browne, Inc. (“Thom Browne”), Youth To The People Inc. (“Youth To The People”), Bonobos and ILIA, Inc., among others.
PIMCO is one of the world’s premier fixed income investment managers. For nearly 50 years, PIMCO has worked relentlessly to help millions of investors achieve their objectives—regardless of shifting market
conditions. Today, PIMCO has offices around the world and more than 2,800 professionals committed to its mission: delivering superior investment returns, solutions and service to its clients. PIMCO’s alternatives platform combines the firm’s
time-tested investment process with opportunistic approaches to marketable and private credit, global real estate, macroeconomic, and quantitative strategies. PIMCO is owned by Allianz S.E., a leading global diversified financial services
provider.
Our Management Team
Our Company is led by Ken Suslow, our Chief Executive Officer and Chairman, Richard Henry, our Chief Financial Officer, and Joe Lamastra, our Chief Operating Officer, who are supported by the broader Sandbridge team,
as well as our directors and advisors. For more information on our management team, please read Item 10 “Directors, Executive Officers and Corporate Governance” below.
Business Strategy
The coronavirus pandemic has served to both heighten and accelerate the highly dislocative trends that began impacting the global consumer retail landscape well in advance of our current moment. We believe the
resulting economic reality has pushed forward by years the substantial opportunity set for modern brands with similarly modern business models. We expect these brands will inevitably continue to garner large market share gains at the expense of
their challenged legacy retail competitors. We believe these trends underscore a long-term fundamental shift in consumer behavior, one that will force global brands to revise and refresh their strategic agenda, refocus their distribution and
supply chains, and favor brand storytelling and authentic messaging over the simple selling of generic product stacked high and wide on retail shelves. These represent just a few of the issues that legacy brands must swiftly confront in order to
survive, and ultimately thrive, in the present consumer environment.
Furthermore, we believe the ongoing “barbell effect”, whereby consumers increasingly gravitate to a pronounced mix of a favored coterie of luxury brands and experiences at the high end of the discretionary scale,
combined with substantial purchasing of deep value offerings, at the expense of those brands stuck in the middle, will continue. As such, we see substantial opportunities to execute upon our targeted sector focus and partnership criteria to align
with the defining trends impacting the consumer industry today, and for the foreseeable future. These include (a) the acceleration of category disruption, (b) the rapid growth of modern “2.0 brands,” and (c) heightened adoption of digital and
e-commerce.
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Above all, we always pause to ask the simple question: “If this brand didn’t exist, would it truly be missed? Said another way, is this brand importantly differentiated in a world where sameness and homogeneity
predominate?” Thus, when the right circumstances arise, we can engage our expertise as dedicated industry investors and operators to pursue a potential business combination with these special brands with the aim to create future value for our
stockholders.
Based on our collective experience, we believe that brands must have a strong omni-channel approach so as to be best positioned to, at once, both deliver excellence to, and engagement with, their consumers. We
believe an increasingly engaged consumer will remain ever more digitally connected well into the future. Shifting consumer preferences as well as the ongoing tectonic shifts brought about by the global pandemic have led to accelerating retail
store count rationalization, while e-commerce has emerged as the long-term channel winner. We believe legacy distribution channels will continue to struggle in this highly dynamic environment. As such, we are highly focused on increasingly
digitalized consumption in tandem with the ongoing convergence of physical and online channels. We believe that innovative brands with modern approaches to operating their businesses will continue to take share from legacy incumbents given their
pronounced focus on nimble multi-channel strategies that better appeal to, and conform with, the continued shifts in the global consumer landscape.
The aforementioned shifts in consumer behavior help to support the basis of our investment thesis; additionally, within the modern brand firmament, we believe certain sectors remain particularly well positioned given
the confluence of factors, both brand specific and otherwise, and that are well aligned with our investing expertise. These include, but are not limited to: (a) “2.0” consumer digital platforms and technologies, (b) beauty and personal care, (c)
luxury, and (d) health and wellness.
“2.0” Consumer Digital Platforms and Technologies
Just as the Great Recession shaped subsequent consumer behavior, the pandemic has significantly altered consumer purchasing behavior yet again, representing a key inflection point that has
catalyzed a steeper adoption curve for e-commerce. Accordingly, digital “2.0” brands, such as asset-light marketplace models, digital commerce enablers, and customer data analytics providers, have become more valuable as we continue down this
highly connected path. As such, leveraging technology and modern distribution channels are now more critical than ever for businesses to remain relevant in the post pandemic landscape. This in turn results in more nascent, tech-enabled solution
categories gaining ever stronger momentum while also presenting highly attractive transaction opportunities.
Beauty and Personal Care
We believe that the beauty and personal care industry – a large and growing market globally – represents a diverse, attractive field of investment opportunities, as ongoing shifts in consumer
preferences combine with demographic trends to drive disruption in the space. Skincare, in particular, has been a conduit for growth, and is projected to continue to grow in the coming years; much of this growth is being led by the Asia Pacific
region, with China representing an especially large and flourishing market.
Key trends in the space include a movement to organic, “farm-to-face” cosmetics, with natural and organic personal care product sales projected to grow robustly in the coming years. This
accompanies a general shift toward consumer demand for transparency around ingredients and responsible sourcing. Additionally, digitally native platforms within beauty and personal care have been and continue to be important drivers of
innovation, brand messaging, and global growth.
The global pandemic has accelerated a number of existing trends, including increased focus on already-growing direct-to-consumer brands and an acceleration in demand for “self-care” categories,
which is expected to persist as consumers establish new care routines and discover new products online.
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Luxury
The luxury goods sector has a global reach that has powered its growth over the past decade, and it has demonstrated the potential to further expand and evolve. The global pandemic has accelerated
fundamental changes associated with broader industry shifts, including greater consumer adoption of digital shopping, the need for reinvention of the luxury supply chain and heightened environmental and social consciousness among consumers. The
rapid movement to online purchasing during the pandemic has reinforced the critical nature of investments in the creation of omni-channel customer experiences. While consumers will still visit physical stores, we believe they will be actively
seeking omni-channel experiences and brand narratives that resonate with them as differentiators in the broader landscape. Further, in today’s highly dynamic environment, luxury goods players can position the pandemic as a catalyst for supply
chain reinvention, as the industry becomes more flexible and reactive to trends. We believe the need for faster decision-making processes, the need for evolution of inefficient legacy processes and the adoption of advanced analytics are important
factors as brands reinvent their customer experience. Lastly, increasing consumer focus and discernment regarding differentiated products from heritage brands will likely continue to drive purchasing behavior, elevating the continued importance
of brand messaging and loyalty. We believe there is significant opportunity to partner with the select brands that are on the forefront of these trends, particularly given the current dislocations in the global market for luxury goods.
Health and Wellness
The coronavirus pandemic has continued to accelerate the shift in consumers’ demand for health and wellness, as consumers are increasingly undertaking basic preventative measures, adopting healthy
lifestyles and seeking products and services that support overall wellbeing. The home has become the wellness hub for consumers during the pandemic, and demand for digital health and remote healthcare is expected to rise. Furthermore, consumers
are increasingly focused on the “clean” and “conscious” attributes of wellness products, and brands with more transparent narratives and those that align with intrinsic personal values are better poised to resonate strongly. Such purpose-driven
brands that connect with their consumer are key, and consumers will accordingly turn to products that they trust and know best. As a result, certain health and wellness brands will be significantly better positioned to drive enhanced user
engagement and relevance. Top influence criteria in wellness purchases, including digital engagement and health-inspired beauty, emphasize the importance of brands capturing these trends. We see significant opportunities in the shifting consumer
landscape catering to consumer demands for simplicity and overall wellbeing.
We believe that the transformational forces underpinning the consumer landscape have demonstrable intermediate and long-term momentum, and will therefore be a core focus of our team as we pursue a
business combination. As such, we are acutely focused on the market share shifts that have accelerated in the current environment. This has only heightened the importance of a strong operational focus on ensuring a seamless consumer experience
that effectively leverages multiple distribution channels given the ever more rapid convergence of physical and digital distribution platforms. Given the above thesis, we will target next-generation brands and platforms in categories that we view
as particularly vulnerable to disruption.
We believe that our team’s collective experience and expertise over the years positions us well to identify potential business combination opportunities that are aligned with the aforementioned
dynamics, thereby offering the potential for value growth over time. Along these lines, our team has a strong track record of partnering with, and investing in, leading global brands, including The RealReal, Farfetch, Thom Browne and Rossignol,
among many others.
We believe the depth of our team’s specialized consumer sector expertise and deep industry relationships will be an important differentiator in attracting high-quality and predominately proprietary
global deal flow, and will facilitate thorough and nuanced analysis of potential business combination opportunities and position us well to assist potential business combination counterparties with the design and execution of transformative
global growth strategies.
Our acquisition strategy will leverage the Sandbridge fund’s and the PIMCO private funds’ networks of proprietary deal sourcing where we believe a combination of collective industry expertise and
strategic relationships may provide us with attractive business combination opportunities. Additionally, we expect that deep relationships resulting from years of experience with both public and private consumer companies may bolster our access
to potentially attractive business combination opportunities.
Our goal is to collaborate with an importantly differentiated brand that will benefit from access to the capital markets, a deep network of highly experienced industry talent, and a proprietary
value-creation playbook designed for the modern brand landscape. We plan to employ a fundamental acquisition framework that seeks out enduringly important brands with the potential for substantial equity value appreciation over time.
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The management team along with its board of directors and advisors have experience in:
Following the completion of our initial public offering, we are in communication with our team’s networks of deal sourcing relationships to articulate the parameters for our search for a potential business
combination and begin the process of pursuing and reviewing potential opportunities.
Acquisition Criteria
Our primary target consumer segments include modern consumer brands, disruptive consumer-based technologies, beauty and personal care, luxury, and health and wellness. Within these segments we plan
to target authentic, importantly differentiated brands whose positioning dovetails with our broader industry thesis, and that are already leading players in their market niche, while effectively leveraging offline and digital convergence
synergies. Importantly, our overriding thesis reflects our view that there will be continued erosion of structurally challenged retail concepts attached to attendant disruptive opportunities for innovative “2.0 brands.”
We will utilize the following criteria and guidelines in evaluating acquisition opportunities, though we may decide to enter into a business combination with a target business that does not meet
one or more of these criteria and guidelines:
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based on these general guidelines as well as other
considerations, factors and criteria that our management and board of directors may deem relevant.
Acquisition Process
In evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management and key employees,
document reviews and inspection of facilities, as well as a review of financial, operational, legal and other information that is made available to us. We will also utilize our operational and capital planning experience.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business
combination with a company that is affiliated with our sponsor or any of our officers or directors, we, or a committee of our independent directors, will obtain an opinion that our initial business combination is fair to us from a financial point
of view from either an independent investment banking firm or an independent accounting firm.
Each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officer or director were
to be included by a target business as a condition to any agreement with respect to our initial business combination.
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Initial Business Combination
As required by the NYSE rules, our initial business combination will be approved by a majority of our independent directors. The NYSE rules also require that we must complete our initial business
combination with one or more businesses that together have an aggregate fair market value of at least 80% of the net assets held in the trust account (excluding the deferred underwriting commissions and taxes payable) at the time of our signing a
definitive agreement in connection with our initial business combination. We refer to this as the 80% of net assets test. Our board of directors will make the determination as to the fair market value of our initial business combination. The fair
market value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). Even
though our board of directors will rely on generally accepted standards, our board of directors will have discretion to select the standards employed. In addition, the application of the standards generally involves a substantial degree of
judgment. Accordingly, investors will be relying on the business judgment of the board of directors in evaluating the fair market value of the target or targets. The proxy solicitation materials or tender offer documents used by us in connection
with any proposed transaction will provide public stockholders with our analysis of our satisfaction of the 80% of net assets test, as well as the basis for our determinations. If our board of directors is not able to independently determine the
fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of the 80% of net
assets test. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or
experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. In addition, we have agreed not to enter into a definitive agreement regarding an initial
business combination without the prior consent of the Sandbridge fund and the PIMCO private funds.
We may, at our option, pursue an acquisition opportunity jointly with one or more parties affiliated with Sandbridge Capital or PIMCO, including, without limitation, officers and partners of
Sandbridge Capital or PIMCO, investment funds, accounts, co-investment vehicles and other entities managed by affiliates of Sandbridge Capital or PIMCO, and/or investors in funds, accounts, co-investment vehicles and other entities managed by
affiliates of Sandbridge Capital or PIMCO. Any such party may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing equity to such
parties. The amount and other terms and conditions of any such joint acquisition or equity issuance would be determined at the time thereof.