By Krystal Hu

Nov 23 (Reuters) – Clean-check acquisition firm GigCapital2 Inc has agreed to merge with UpHealth Holdings Inc and Cloudbreak Well being LLC to create a digital healthcare firm valued at $1.35 billion, folks conversant in the matter stated on Monday.

The deal is the most recent in a string of mergers in search of to capitalize on the expansion in telemedicine fueled by the COVID-19 pandemic. Direct-to-consumer well being firm Hims Inc and acute care telemedicine firm SOC Telemed Inc additionally clinched offers with so-called particular purposed acquisition corporations (SPACs) this 12 months.

A SPAC resembling GigCapital2 is a shell firm that makes use of proceeds from an preliminary public providing (IPO) to accumulate a non-public firm, usually inside two years. A merger with a SPAC is an alternative choice to a standard IPO that extra non-public corporations have turned to this 12 months.

By combining UpHealth Holdings and Cloudbreak, GigCapital2 plans to create an organization centered on digital care administration, telehealth, digital pharmacy and technology-enabled behavioral well being, the sources stated, including that the merged firm expects to generate roughly $115 million in income in 2020.

The sources requested anonymity forward of the deal’s anticipated announcement afterward Monday.

The deal comes after GigCapital2 deserted a non-binding $880 million settlement it entered into final month to merge with Bolder Industries, a maker of recyclable plastic and rubber.

GigCapital2 determined that telehealth was a extra engaging sector to give attention to.

GigCapital2, which raised $150 million in an IPO in June 2019, plans to lift $160 million in type of a non-public funding in public fairness, or PIPE transaction, to assist finance the brand new deal, the sources stated. (Reporting by Krystal Hu in New York, Modifying by Sherry Jacob-Phillips)