ISOS - SPACtrac Report - ISOS Acquisition Corp: Why This SPAC May Be Different

The Deal. Bowlero, the largest bowling operator and the owner of the Professional Bowlers Association (PBA), will be brought public through a merger with publicly traded, Isos Acquisition Corp., (ISOS). The transaction values Bowlero at $2.6 billion enterprise value and is expected to close late October, early November 2021.A growth oriented business that generates significant cash flow. The bowling has enjoyed a renaissance since 2010 with same store revenue growth and with high margins, save 2020 due to the pandemic. The company recently reported strong revenue growth that is above pre-Covid levels, which implies that the industry should enjoy continued favorable growth. Attractive roll-up opportunity. Based on Bowlero's data, the company controls only 8% of the bowling centers in the United States. There are roughly 3,700 bowling centers in the United States, which are largely mom and pop owned, offering attractive acquisition prospects. Financial flexibility. Following the merger the company is expected to have over $250 million in cash and reasonable debt levels, estimated to be below 3 times net debt to EBITDA. Furthermore, Bowlero management anticipates high free cash flow conversion near 45%, which implies strong free cash flow generation of over $120 million.Compelling stock valuation relative to peers. Near current levels, the ISOS shares trade at an implied 9.2 times Enterprise Value to Bowlero's 2022 EBITDA, well below its peers. Should the shares trade in line with its peers, the target price would be $15. Management provides a strong case that the shares could trade higher, which is detailed later in this report. Read More >>