The medical imaging provider, Butterfly, came up with breakthrough technology for an ultrasound with its Butterfly iQ – a simple handheld ultrasound device that can be plugged into a smartphone. Founded in 2011, the firm has been selling the product for the past two years at a price of $2000. Butterfly’s iQ device was approved for use by the U.S regulators in 2018 while a newer version with additional features, called the Butterfly iQ+ was released this year.
The acquisition by Longview Acquisition, the special purpose acquisition company backed by Larry Robbins’s hedge fund Glenview Capital Management, is expected to provide Butterfly with more than $580 million in cash with $414 million held in Longview’s trust.
According to Butterfly, the deal will increase the sales of its iQ devices around the world. The deal will lead to the integration of Butterfly backers including Baillie Gifford and the Bill and Melinda Gates Foundation with Larry Robbins’s Glenview Capital Management.
The aim of the digital health company is to provide affordable, superior, and accessible ultrasound imaging. Butterfly’s CEO, Laurent Faracci said that the capital raised will not only help the company expand to wider markets but also help in the development of innovative devices and updates.
Longview is expected to join the firm’s board with 7.6% of ownership in the company. Longview has also raised $175 million in new equity with investors including Eldridge Industries LLC, Fidelity Management, and Wellington Management.
Robbins’s company started off in May with one equity unit made up of one common share and one-third of a warrant. On Friday, the shares of the special purpose acquisition company (SPAC) jumped as much as 8.5% to trade at $10.70.
SPACs have been rising recently as an alternative to IPOs. SPACs raise capital through IPO with the aim of acquiring another existing company.
The merger between the two companies is expected to be completed in the first quarter of 2021. Positive cash flows are expected to be generated in 2024, by when the company is hoping to have enough capital to fund its business plan and enable it to consider additional investments, said Robbins. After the deal, Butterfly Network will list on the New York Stock Exchange under the symbol “BFLY”.
Shares of Longview were up 4% in premarket trading and increased up to 20% after the stock market opened.