Rare-Earth Metals Firm MP Materials to Go Public via Blank-Check Company - The Wall Street Journal

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MP Materials’ mine in Mountain Pass, Calif. The company is the only current U.S. producer of rare earths.

Photo: steve marcus/Reuters

By

Corrie Driebusch

• Biography
• @cdriebusch
• corrie.driebusch@dowjones.com

July 15, 2020 7:00 am ET

Rare-earth minerals producer MP Materials Corp. will go public through a blank-check company, joining the growing wave of companies doing so.

MP Materials has struck a deal to merge with Fortress Value Acquisition FVAC 10.40% Corp. in a deal worth more than $500 million, which will value MP at $1.5 billion. The deal includes the special-purpose acquisition company’s $345 million in assets as well as an additional $200 million investment from institutional investors. Chicago hedge fund JHL Capital Group LLC and QVT Financial LP, which control MP Materials, will roll over their equity stake into the newly publicly traded entity.

Rare-earth minerals aren’t as rare as their name might indicate: The elements are used in a variety of high-tech items, from cellphones to military equipment to the magnets used to power electric cars.

Rare-earth minerals have risen to prized status in the trade tug of war between the U.S. and China in recent years. China currently dominates rare-earth production due in part to labor costs and environmental restrictions in the U.S.

U.S. politicians and government officials have tried to shift the balance more toward home, and MP Materials, the only current U.S. producer of rare earths, has been a beneficiary of the push.

For example, the Defense Department is helping to pay for the development of a processing facility at the Mountain Pass mine in the California desert. JHL and others bought the mine out of bankruptcy three years ago when they started MP Materials.

To become a publicly listed company, MP Materials is taking advantage of the latest trend in the industry: using a blank-check company, or one whose purpose is to raise money for acquisitions.

Though blank-check companies have been around for many years, bigger, more brand-name companies are only recently tapping them for their IPOs. Last year, Virgin Galactic, Richard Branson’s space-tourism venture, made a splash when it agreed to go public through a blank-check company. On Sunday, health-care-services provider MultiPlan Inc. said it was merging with a blank-check company in an $11 billion deal.

This year, amid the coronavirus pandemic, investors have put billions of dollars into new blank-check companies as they choose to invest their money into firms that can search for good deals.

Blank-check companies raise money by going public and then, while they trade, hunt for a company in which to invest the funds they raised. They must identify a target to bring public within two years, on average, and the investment is subject to shareholder approval.

In addition to more companies seeking IPOs through blank-check companies, more prominent investment managers are dipping their toes in the blank-check pool. Hedge-fund billionaire William Ackman is seeking to raise up to $4 billion this week in the IPO of what would be the biggest-ever blank-check company, the latest stop on his comeback tour after several challenging years.

Write to Corrie Driebusch at corrie.driebusch@wsj.com

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