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What are SPAC units?

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March 15, 2022

Jump to heading What are SPAC units?

When an initial public offering (IPO) occurs, a SPAC will typically offer units - usually at a price of $10 per unit.

These units consist in one share of common stock (share) plus a warrant (or portion of a warrant) to purchase common stock (usually exercisable at $11.50).

Units may consist of one share of common stock plus one full warrant, 1/2 of a warrant, or 1/3 of a warrant, depending on the size, track record and prominence of sponsors and the investment bank managing the IPO.

The common stock (shares) and warrants included in SPAC units become separate in the weeks following the IPO. The warrants and shares then trade independently alongside the unseparated units.

To learn more about SPACs, check out our other articles.

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