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Form 425 LEGATO MERGER CORP. II Filed by: LEGATO MERGER CORP. II

July 5, 2022 5:02 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): July 2, 2022

 

LEGATO MERGER CORP. II

(Exact Name of Registrant as Specified in Charter)

 

Delaware   001-41090   85-1783294
(State or Other Jurisdiction   (Commission   (IRS Employer
of Incorporation)   File Number)   Identification No.)

 

777 Third Avenue, 37th Floor

New York, NY 10017

(Address of Principal Executive Offices) (Zip Code)

 

(212) 319-7676

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))

 

Securities registered pursuant to section 12(b) of the Act:

 

Title of Each Class   Trading Symbol(s)   Name of each exchange on which registered
Units, each consisting of one share of common stock and one-half of one redeemable warrant   LGTOU   The Nasdaq Stock Market LLC
Common stock, par value $0.0001 per share   LGTO   The Nasdaq Stock Market LLC
Redeemable warrants, exercisable for common stock at an exercise price of $11.50 per share   LTGOW   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

Item 7.01 Regulation FD Disclosure.

 

As previously disclosed, on May 25, 2022, Legato Merger Corp. II, a Delaware corporation (“Legato”), Legato Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Legato (“Merger Sub”), and Southland Holdings LLC, a Texas limited liability company (“Southland” or the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”).

 

Attached as Exhibit 99.1 to this Current Report on Form 8-K is a copy of an article regarding special purpose acquisition companies in which Eric Rosenfeld, Legato’s Chief SPAC Officer, is quoted.

 

The information set forth in this Item 7.01, including the exhibit attached hereto, is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Cautionary Note Regarding Forward Looking Statements

 

Neither Legato, the Company, nor any of their respective affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this Current Report on Form 8-K. This Current Report on Form 8-K is not intended to be all-inclusive or to contain all the information that a person may desire in considering the proposed Transactions discussed herein. It is not intended to form the basis of any investment decision or any other decision in respect of the proposed Transactions.

 

This Current Report on Form 8-K and the exhibit furnished herewith include “forward-looking statements” made pursuant to the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 with respect to the proposed Transactions between Legato and the Company, including statements regarding the benefits of the Transactions, the anticipated timing of the Transactions, the business of the Company and the markets in which it operates. Actual results may differ from expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements generally are identified by the words or phrases such as “aspire,” “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “will be,” “will continue,” “will likely result,” “could,” “should,” “believe(s),” “predicts,” “potential,” “continue,” “future,” “opportunity,” seek,” “intend,” “strategy,” or the negative version of those words or phrases or similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, Legato’s and the Company’s expectations with respect to future performance and anticipated financial impacts of the proposed Transactions.

 

These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside Legato’s and the Company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: general economic, financial, legal, political and business conditions and changes in domestic markets; the potential effects and impact of the global COVID-19 pandemic; risks related to the business of Southland and the timing of expected business milestones; changes in the assumptions underlying the expectations of Southland regarding its future business; the effects of competition on Southland’ future business; the outcome of any legal proceedings that may be instituted against Legato, Southland, the combined company or others following the announcement of the proposed Transactions and any definitive agreements with respect thereto; the inability to complete the proposed Transactions, including, without limitation, the inability obtain approval of the stockholders of Legato or to satisfy other conditions to closing; the ability to meet stock exchange listing standards in connection with and following the consummation of the proposed Transactions; the risk that the proposed Transactions disrupt current plans and operations of Southland or Legato as a result of the announcement and consummation of the proposed Transactions; the ability to recognize the anticipated benefits of the proposed Transactions, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; costs related to the proposed Transactions; changes in applicable laws or regulations and delays in obtaining, adverse conditions contained in, or the inability to obtain regulatory approvals required to complete the proposed Transactions; the parties’ estimates of expenses and profitability and underlying assumptions with respect to stockholder redemptions and purchase price and other adjustments; the possibility that the combined company may be adversely affected by other economic, business, and/or competitive factors; and other risks and uncertainties set forth in the filings made by Legato with the SEC, including the proxy statement/prospectus that will be filed relating to the proposed Transactions. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements.

 

Legato and the Company caution that the foregoing list of factors is not exclusive. Legato and the Company caution readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Neither Legato nor the Company undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

 

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Additional Information and Where to Find It

 

This document is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Transactions and does not constitute an offer to sell, buy, or exchange or the solicitation of an offer to sell, buy, or exchange any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, purchase, or exchange of securities or solicitation of any vote or approval in any jurisdiction in contravention of applicable law.

 

In connection with the proposed Transactions between Legato and the Company, Legato will file with the SEC a Registration Statement on Form S-4 with the SEC (the “Registration Statement”), which will include a proxy statement for the solicitation of approval of the adoption of the Merger agreement and the approval of the Transactions and issuance of the shares in the Transactions (the “Proxy Statement/Prospectus”). Legato plans to mail the definitive Proxy Statement/Prospectus to its stockholders in connection with the transaction. INVESTORS AND SECURITYHOLDERS OF LEGATO ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SOUTHLAND, LEGATO, THE TRANSACTIONS AND RELATED MATTERS. Investors and securityholders will be able to obtain free copies of the Proxy Statement/Prospectus (when available) and other documents filed with the SEC by Legato and Legato through the website maintained by the SEC at www.sec.gov. In addition, investors and securityholders will be able to obtain free copies of the documents filed with the SEC by directing a written request by mail to Legato at 777 Third Avenue, 37th Floor, New York, NY 10017 or by email to [email protected]

 

Participants in the Solicitation

 

Legato, the Company, and certain of their respective directors, executive officers, and employees may be considered to be participants in the solicitation of proxies in connection with the transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the stockholders of Legato in connection with the transaction, including a description of their respective direct and indirect interests, by security holdings or otherwise, will be included in the Proxy Statement/Prospectus described above when it is filed with the SEC. Additional information regarding Legato’s directors and executive officers can also be found in Legato’s annual report on Form 10-K for the year ended December 31, 2021. These documents are available free of charge as described above.

 

No Offer or Solicitation

 

This Current Report on Form 8-K does not constitute (i) a solicitation of a proxy, consent, or authorization with respect to any securities or in respect of the proposed business combination, or (ii) an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act.

 

Non-GAAP Financial Information

 

Some of the Company’s financial information and data contained herein and in the exhibit hereto does not conform to SEC Regulation S-X in that it includes certain financial information not derived in accordance with GAAP. Accordingly, such information and data will be adjusted and presented differently in the Registration Statement filed with the SEC. Legato and the Company believe that the presentation of non-GAAP measures provides information that is useful to investors as it indicates more clearly the ability of the Company to meet capital expenditures and working capital requirements and otherwise meet its obligations as they become due and facilitates comparison of the results of its business operations between its current, past, and projected future periods.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit   Description
99.1   Article
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: July 5, 2022 LEGATO MERGER CORP. II
     
  By: /s/ Gregory Monahan
    Gregory Monahan
    Chief Executive Officer

 

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Exhibit 99.1

 

Forget Flying Taxis—Down-to-Earth Companies Are Now the Prime SPAC Targets

 

With deal deadlines looming, industrial, manufacturing and other staid sectors have become more appealing

 

By Will Feuer
July 2, 2022 9:03 am ET
Boring is better in the beaten-down world of SPACs right now.

 

At the height of the boom in special-purpose acquisition companies, speculative merger targets like electric-car makers and flying-taxi startups ruled the day. But people who track and make SPAC deals say the types of unprofitable companies that became popular among SPAC investors during the pandemic are falling out of favor.

 

With that shift, some SPACs are seeking out fresh deals in industrial, manufacturing and other sectors with steady cash flow.

 

R. Brad Martin is the chairman and chief executive of Riverview Acquisition Corp., which agreed in April to merge with Arkansas-based coffee-supply-chain company Westrock Coffee in a $1.2 billion deal. He said that when he launched his SPAC in August 2021, he wanted to find a business in a proven industry that he could make a long-term investment in.

 

“I actually spent more time describing what we wouldn’t do than I did what we were going to do —and we weren’t going to fly taxis and build robots and splice genes,” Mr. Martin said. “We were only going to partner with a business in an industry we understood that had serious growth prospects and a need for capital.”

 

SPACs, also known as blank-check companies, have no operations and are designed to merge with private companies to take them public. A SPAC typically has two years to do a deal or it must return the money to investors. Such mergers became popular alternatives to traditional initial public offerings in the past few years, allowing companies to raise cash while also making projections the firms typically couldn’t make within the confines of a traditional IPO.

 

The current shift in SPAC targets echoes a trend in broader markets, where investors have sold off shares of unprofitable tech companies as interest rates rise, inflation remains high and stock prices slide.

 

 

 

 

‘‘There will be a shakeout, and there will be some SPAC management teams that will be survivors.
— SPAC veteran Eric Rosenfeld

 

Eric Rosenfeld, chief SPAC officer at Legato Merger Corp. II, agreed in May to merge with Southland Holdings LLC, a Grapevine, Texas-based construction company that has roots stretching back more than a century. The deal values the combined company at around $800 million.

 

Mr. Rosenfeld is a SPAC veteran, having launched eight of them since 2004. Most of them have merged with industrial companies. Southland, which is involved in building tunnels, water pipelines and other projects, fits the mold of past deals he has done, including for a dry-bulk logistics firm, a liquefied-natural-gas company and a steel producer.

 

He said he hopes that investors can distinguish between more traditional SPACs and those that capitalized on the frenzy of the past two years.

 

“There will be a shakeout, and there will be some SPAC management teams that will be survivors because they have the experience and the know-how to pick real targets with real revenues and real earnings that are good businesses, as opposed to targets more suitable for venture capital,” Mr. Rosenfeld said.

 

Data from SPAC Research shows that tech companies have still been popular targets for SPACs so far this year, but founder Benjamin Kwasnick said he expects the shift away from tech toward more reliable sectors to accelerate as deadlines for SPACs to find targets roll in around the end of this year.

 

“Growth at all costs is out and profitability is in, and we are seeing a shift in that direction,” Mr. Kwasnick said.

 

The deal for Southland, which is expected to close by year’s end, comes as others have fizzled and the SPAC market has cooled off significantly. Ticketing platform SeatGeek and media outlet Forbes Global Media Holdings Inc. recently abandoned plans to go public through SPAC deals. They are among 27 SPAC mergers that have been called off this year, according to Dealogic, from savings-and-investing app Acorns Grow Inc. to home-buying startup Knock Lending LLC.

 

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Others have had spotty track records. EV maker Electric Last Mile Solutions Inc. and online car retailer Cazoo Group Ltd. merged with SPACs last year, but their stocks struggled. Electric Last Mile Solutions last month commenced Chapter 7 bankruptcy proceedings. At least 25 companies that merged with special-purpose acquisition companies between 2020 and 2021 have issued so-called going-concern warnings in recent months, The Wall Street Journal has reported, including scooter-rental company Helbiz Inc. and air-taxi maker Lilium NV.

 

Critics of SPAC mergers said those stumbles are signs of froth and a warning about trying to go public using this method. But some SPAC sponsors have continued to strike deals.

 

Last month, Americas Technology Acquisition Corp. said it would merge with Rally Communitas Corp., which operates a marketplace for private buses. Also last month, Mudrick Capital Acquisition Corp. II said it agreed to merge with online jewelry retailer Blue Nile Inc., a deal that came after Mudrick called off a previously announced merger with baseball-card company Topps Co.

 

Another SPAC agreed earlier this year to buy one of Australia’s oldest copper mines, CSA Copper Mine, from Glencore PLC. Other targets of deals announced this year include Chinese luxury-fashion group Lanvin Group, and European lottery operator Allwyn Entertainment. Last month, a nearly 35-year-old wholesale distributor of videogames, music and movies agreed to merge with a SPAC in a $480 million deal.

 

Some companies in speculative sectors are still finding sponsors among SPACs, with deals being struck this year for a maker of high-precision gears for electric cars and a cryptocurrency miner. In total, at least 75 U.S. SPACs have struck deals to merge with a target this year, according to Dealogic, half as many as over the same period last year.

 

Kim Schaefer, chief executive of Alpine Acquisition Corp., a SPAC that plans to merge with micro-amusement-park operator Two Bit Circus Inc. in addition to two conference hotels from Atrium Hospitality LP, said she was looking for a merger partner that would bring the hard assets Two Bit needed to drive expansion.

 

Ms. Schaefer, who is also CEO of Two Bit Circus, said the SPAC wanted the combined company to have real value on day one after the deal, and the two conference hotels deliver on that, as well as provide an opportunity to scale Two Bit’s business. She acknowledged that the waning investor appetite for SPAC deals could be an obstacle, but hopes that investors will see the intrinsic value and growth prospects of the company.

 

“I think that the merits of the business are more important than the vehicle,” she said.

 

Write to Will Feuer at [email protected]

 

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