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November 23, 2020

Rothberg’s Butterfly Network to go public after $1.5B merger

Photo | COURTESY BUTTERFLY NETWORK Butterfly iQ uses semiconductor technology to replace large and expensive ultrasound carts.

Guilford-based health technology startup Butterfly Network Inc., maker of a portable, pocket-sized ultrasound device, is merging with hedge fund-backed Longview Acquisition Corp. and going public.

The merger is valued at $1.5 billion and is expected to close by the end of March 2021, when the company’s stock will begin trading on the New York Stock Exchange under the symbol “BFLY,” the two companies announced Friday.

Founded in 2011 by prominent Connecticut life sciences entrepreneur Jonathan Rothberg, Butterfly became a so-called unicorn in 2018, the name for a private company valued at more than $1 billion. 

That same year, it launched Butterfly iQ, which uses semiconductor technology to replace large and expensive ultrasound carts.

The device resembles a hand-held electric hair trimmer and plugs into an iPhone for instant imaging. The company’s goal is to make life-saving scans accessible and affordable to everyone.

“We believe the combination with such a premier healthcare partner as Longview Acquisition Corp. will amplify and accelerate the adoption of Butterfly iQ around the world,” Butterfly CEO Laurent Faracci said in a statement. 

Longview is backed by hedge fund Glenview Capital Markets. It is a special purpose acquisition company, or SPAC, formed specifically to raise capital through an initial public offering to acquire an existing company. 

Sometimes referred to as “blank check” companies, SPACs don’t identify their acquisition target at the time of the IPO.

During a webcast for investors on Friday, Glenview CEO Larry Robbins said the SPAC went public in May with the goal of acquiring a growing business at discount, and accelerating that startup’s growth using the hedge fund’s two decades of health care investing expertise.

“Butterfly is the perfect fit for us,” said Robbins, who will join the board of the combined company.  He said the company reviewed more than 50 investment opportunities to find the right partner. 

The combined company is expected to have $584 million in cash after the closing. 

Under the deal, Butterfly’s management team will continue to lead the combined company; Rothberg will become chairman and be the largest controlling shareholder. 

Longview and its affiliates are expected to own 7.6% of outstanding shares at closing, according to the companies. 

The equity of existing investors, including Baillie Gifford, the Bill & Melinda Gates Foundation and Fosun Industrial Co. Ltd., will convert into shares of the combined company, Butterfly said.

A group of institutional investors including Eldgridge, Fidelity Management & Research Co. LLC, Glenview, Ridgeback, Tenet Healthcare Corp., UPMC Enterprises and Wellington Management have anchored a $175 million PIPE (private investment of public equity) at $10 a share. 

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