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SoftBank-Backed Alto Is in Talks to Merge With Gores SPAC

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·2 min read
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(Bloomberg) -- Alto Pharmacy, a startup that specializes in same-day delivery of prescription medications, is in talks to go public via a blank-check firm affiliated with Alec Gores, according to people with knowledge of the matter.

A deal between Alto and Gores Technology Partners II Inc., featuring a so-called private investment in public equity, or PIPE, is set to value the combined entity at around $2.3 billion, one of the people said. A transaction hasn’t been finalized and it’s possible talks could collapse, but if one is reached, it could be announced in the coming weeks.

Representatives for Gores and Alto declined to comment.

Alto is projected to deliver revenue of about $700 million in 2021, a figure that may exceed $2 billion in 2022, one of the people said. The San Francisco-based startup, founded in 2015 and led by CEO Matt Gamache-Asselin, operates in cities including New York, Los Angeles, Denver, Dallas, Houston and Seattle. A single Alto distribution location delivers to the same area as about 400 chain pharmacies, its website shows.

Alto was last valued at $600 million, according to PitchBook. Its backers include SoftBank Group Corp.’s Vision Fund 2, GreenOaks Capital, Jackson Square Ventures, Olive Tree Capital and Zola Global. The company was previously known as ScriptDash.

Gores Technology Partners II raised $460 million in a March initial public offering. Justin Wilson, now a Gores senior managing director and co-CEO of the SPAC, led SoftBank’s investment in Alto alongside Jeff Housenbold.

“​U.S. pharmacies comprise a $350 billion market, but providers and consumers face meaningful pain points,” Wilson said in a February 2020 statement announcing SoftBank’s investment in Alto. “Traditional pharmacies still rely on outdated technologies like phone, fax, and paper, that aren’t built for our increasingly digital world.”

Other digital health startups including Hims Inc., Talkspace, 23andMe Inc. and DocGo Inc. have agreed to go public via SPAC mergers.

(Updates with revenue projections in fourth paragraph.)

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