Blank-check companies, flush with cash and on the hunt for a private business to take public, have started adding corporate carveouts to their list of potential purchases.

The surge in special purpose acquisition companies, which have raised more than $137 billion over the past 12 months, has set off a global search for suitable targets — usually startups with little revenue or mature companies sitting in private equity portfolios. Now SPACs are also looking at divisions of public companies, with an eye on those that have the potential to be carved out as standalone businesses.

Publicly traded packager Ardagh Group SA agreed to sell its beverage-can unit to a blank-check company backed by financier Alec Gores. The transaction valued the can business at $8.5 billion including debt, making it the biggest SPAC deal involving a corporate carveout since the surge began, according to data compiled by Bloomberg.

This type of transaction could become popular as more blank-check firms move to the dealmaking stage of their life cycle, crowding the market with suitors looking for a transaction.

“It’s a pretty sizable deal,” said Christopher Anthony, a partner at Debevoise & Plimpton LLP. “It’ll be interesting whether this gets on people’s radar and stokes interest for this type of transaction.”

Liquidity Path

Eventbrite Inc. co-founder Kevin Hartz, whose SPAC announced a $2.1 billion deal to merge with Markforged Inc., said that a public-company spinout was among the targets it reviewed before choosing the manufacturer of 3D printers.

“SPACs have the ability to offer a path to liquidity not just for standalone-type private companies, but also public companies,” Hartz said.

While blank-check companies have circled carveouts before, some haven’t made it to the finish line. Hartz said it’s easier to complete a deal with a private company than a spun-out entity, whose financials and accounting functions must be separated from its parent.

Michael Klein’s Churchill Capital Corp. IV, months before it announced a deal with Lucid Motors Inc., held talks with AT&T Inc. about acquiring a part of satellite provider DirecTV, Bloomberg News reported.

Some do succeed. Intercontinental Exchange Inc. in said it would list its cryptocurrency platform Bakkt Holdings LLC through a SPAC in a deal that valued the unit at $2.1 billion. International Business Machines Corp., which is exploring a sale of its Watson Health business, may consider listing it via a SPAC as one option, according to a person familiar with the matter. IBM declined to comment.

There could be benefits for a SPAC’s management team in buying a company that’s already been part of a public entity, said Ivana Naumovska, a professor of entrepreneurship at INSEAD Business School, based in Singapore.

“Compared to acquiring private targets, acquiring spun-off subsidiaries of public firms seems less risky for SPACs in terms of due diligence, accounting, reporting, and governance considerations,” Naumovska, said. “Spun-off entities seem better equipped for the public market.”

Keep Control

SPAC spinouts could particularly appeal to companies that want to get value out of a unit without giving up control. Ardagh, based in Ireland, will retain an 80% stake in the beverage-can unit, which will be listed on the New York Stock Exchange and run by its existing management team, according to a statement. The deal will help reduce Ardagh’s $6 billion debt pile.

Jamie Corner, a partner at law firm Simmons & Simmons LLP, expects more carveouts to list via blank-check companies, even if separating business segments from listed companies can be complex and time-consuming.

“It was going to take a little time for people to work out they could use the SPAC as a tool for a de-merger and then execute on that plan,” he said.