Executive Summary / Key Takeaways

• Starry Sea Acquisition Corp (NASDAQ:SSEA) is a Special Purpose Acquisition Company (SPAC) poised to transition into an operating entity through a proposed business combination with Forever Young International Limited, a health industry operator in China.
• The company's core investment thesis hinges on the successful completion of this merger, which aims to capitalize on the rapidly expanding and evolving healthcare market in China, projected to reach US$2 trillion annually by 2035.
• SSEA recently completed its Initial Public Offering (IPO) in August 2025, raising $57.5 million, with $57.82 million held in a Trust Account as of September 30, 2025, providing the capital base for the proposed acquisition.
• While SSEA itself is a blank check company without operational revenue, its financial performance for the three months ended September 30, 2025, showed a net income of $70,389, primarily from interest earned on its Trust Account.
• Key risks include the inherent uncertainties of completing a business combination within the mandated timeframe, potential dilution from future financing, and the competitive landscape of SPACs vying for attractive targets.

The Blank Check's Ambition: Unlocking China's Healthcare Potential

Starry Sea Acquisition Corp (SSEA), incorporated in the Cayman Islands on December 5, 2024, embarked on its journey as a blank check company with a singular mission: to identify and execute a transformative business combination. This strategic vehicle, a Special Purpose Acquisition Company (SPAC), is not limited to a particular industry or geographic location in its search for a target. Its overarching strategy is to merge with a business that possesses a competitive advantage and is positioned for high returns and sustainable long-term growth.

A pivotal moment in SSEA's trajectory occurred on September 29, 2025, when it entered into a Letter of Intent (LOI) with Forever Young International Limited. This Cayman Islands exempted company operates as a health industry provider, offering comprehensive management and support service solutions for medical institutions in China. The proposed business combination with Forever Young signals SSEA's strategic pivot towards the burgeoning healthcare sector in China, a market that has demonstrated significant growth and is ripe with opportunity.

Strategic Differentiators in a Dynamic Market

As a SPAC, SSEA's primary "technology" lies in its agile deal-making structure and its access to investor capital, which enables it to pursue targeted acquisitions. This flexible approach allows SSEA to identify and engage with businesses that might benefit from a public listing and strategic capital infusion. The company's management team, with ties to and a base in the PRC, offers a distinct advantage in understanding and navigating the complexities of the Chinese market, particularly within the healthcare sector. This regional expertise is a critical differentiator in a market where local insights can significantly influence deal success.

While specific technological differentiators for Forever Young International Limited are not detailed in the available information, the broader Chinese healthcare sector is characterized by a strong drive towards technological innovation and enhanced service competency. This trend is a primary factor fueling investment in medical value, with both in-hospital and out-of-hospital institutions leveraging diverse digital technologies to achieve cost reduction, efficiency enhancement, and quality improvement. Forever Young's role in providing comprehensive management and support services positions it within this evolving landscape, suggesting a business model that adapts to and potentially facilitates technological advancements within medical institutions.

Competitive Arena: Agility Against Established Players

The SPAC market is inherently competitive, with numerous entities vying for attractive acquisition targets. SSEA operates alongside more established SPACs such as Churchill Capital Corp, Social Capital Hedosophia, and Digital World Acquisition Corp (DWAC). These competitors often boast longer track records, more entrenched investor networks, and proven operational execution in completing mergers. Churchill Capital, for instance, has a history of targeting high-growth sectors and benefits from an experienced management team and broad investor access. Social Capital Hedosophia is known for its focus on technology and innovation, leveraging venture capital connections. Digital World Acquisition Corp targets digital and media sectors, demonstrating experience in navigating regulatory environments for tech mergers.

SSEA, as a newer entrant, possesses an inherent agility and flexibility in its acquisition mandate, allowing it to pursue niche opportunities or emerging sectors with potentially lower overhead costs. This strategic adaptability is a key strength, enabling SSEA to pivot quickly to opportunistic deals. However, SSEA's newness also presents vulnerabilities, including a limited track record and potential dependence on investor sentiment, which could lead to slower deal progression or challenges in competitive bidding scenarios. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, SSEA's strategic move into the growing China healthcare sector represents an attempt to carve out a distinct competitive position.

The broader M&A market has shown resilience, with aggregate deal value rising 10% in the first nine months of 2025, though SPAC mergers have largely reverted to a peripheral role compared to their prominence in 2020-2022. Despite this, the healthcare sector globally saw a 20% increase in M&A deal value during the same period. This trend, coupled with Chinese policymakers actively easing regulations to attract foreign investment and foster innovation in healthcare, creates a favorable environment for SSEA's proposed combination with Forever Young. China's healthcare market is the second largest globally, generating approximately US$1.5 trillion in 2021, and is projected to reach US$2 trillion annually by 2035, driven by rising consumerism and policy tailwinds for digital health.

Financial Footprint and Liquidity for the Journey Ahead

As a blank check company, SSEA's financial performance prior to a business combination is distinct from an operating entity. For the three months ended September 30, 2025, SSEA reported a net income of $70,389. This income was primarily generated from $323,479 in interest earned on cash held in its Trust Account, partially offset by $253,090 in formation and operating costs. For the nine months ended September 30, 2025, the company recorded a net loss of $36,715, as cumulative formation and operating costs of $360,194 exceeded the interest income of $323,479.

The company's liquidity position is robust for its current stage. Following its IPO and a concurrent private placement in August 2025, SSEA deposited $57.50 million into a Trust Account. As of September 30, 2025, the Trust Account held $57.82 million in cash and investments. Additionally, SSEA had $238,025 in cash and cash equivalents outside the Trust Account and working capital of $561,487. These funds are designated to cover ongoing public company compliance costs, administrative expenses, and due diligence related to identifying and consummating a business combination. SSEA pays an affiliate of its Sponsor $10,000 per month for administrative support services. The company believes it has sufficient capital to meet its liquidity needs prior to the completion of its initial business combination.

Outlook and the Path to an Operating Future

SSEA's outlook is entirely tied to the successful consummation of its proposed business combination with Forever Young International Limited. The Letter of Intent contemplates a pre-money equity value for Forever Young in the range of approximately $750 million to $900 million, with consideration expected to be rollover equity at $10 per share. This valuation range provides a concrete, albeit preliminary, indication of the scale of the potential transaction.

The company anticipates increased expenses as it continues to operate as a public entity and incurs significant transaction costs in pursuit of the business combination. While no specific revenue or earnings guidance for future operations is provided (as SSEA is not yet an operating company), the strategic intent is clear: to leverage the capital raised and the expertise of its management to acquire a high-growth business in a promising sector. The success of this strategy will determine SSEA's future financial performance and its ability to generate long-term shareholder value.

Investment Considerations and Risks

Investing in SSEA at this stage carries inherent risks typical of SPACs. The most significant risk is the possibility that SSEA may not successfully complete a business combination within the mandated 15-month timeframe from August 7, 2025, or any approved extension period. Failure to do so would result in the company's liquidation, and public shareholders would receive a per-share redemption price from the Trust Account, while the company's rights would expire worthless. [cite: 10-Q]

Furthermore, the funds held in the Trust Account, while protected, could become subject to claims from the company's creditors, potentially taking priority over public shareholders' claims under certain circumstances. The company's ability to consummate a business combination may also be constrained by a net tangible asset threshold of at least $5.00 million, which could necessitate third-party financing that may not be available on acceptable terms. Should additional financing be required, public shareholders could face significant dilution. As an emerging growth company, SSEA's financial statements may also be less comparable to other public companies due to its election to delay the adoption of new accounting standards.

Conclusion

Starry Sea Acquisition Corp stands at a critical juncture, transitioning from a capital-raising vehicle to a potential operating entity through its proposed merger with Forever Young International Limited. The investment thesis for SSEA is firmly rooted in the successful execution of this business combination, which promises entry into China's dynamic and expanding healthcare market. This sector is characterized by robust growth, increasing M&A activity, and a strong emphasis on technological innovation and service competency, offering a compelling backdrop for SSEA's strategic move.

While SSEA's current financial performance reflects its status as a blank check company, its substantial Trust Account balance provides the necessary capital for the proposed acquisition. The company's agility in identifying a target in a high-growth sector, coupled with its management's regional expertise, positions it to potentially unlock significant value. However, investors must weigh these opportunities against the inherent risks associated with SPACs, particularly the imperative to complete the merger within the stipulated timeframe. The successful integration of Forever Young into SSEA will be the ultimate determinant of the company's long-term trajectory and its ability to deliver on the promise of China's burgeoning healthcare landscape.