As SPAC bubble bursts, Circle terminates its $9 billion merger with Concord

abdelaziz Fathi

USDC stablecoin issuer, Circle has terminated its planned $9 billion SPAC merger with publicly traded blank-check company Concord Acquisition Corp.

The Boston-based company didn’t wait until the termination date of December 10, which could be delayed until January 31 under certain conditions, and scrapped the deal without disclosing the exact reasons.

The two companies initially announced the merger in July 2021 and it was supposed to close in Q4 2021. The original transaction valued the combined entity at a pro forma enterprise value of $4.5 billion, and would have resulted in Circle being listed in Nasdaq.

But in February 2022, Circle delayed its IPO and renegotiated its agreement with Concord to double its proposed value to $9 billion. At the time, Circle said it had amended the deal terms as its financial outlook and market share had improved. Since then, the deal has been stuck trying to get through the US regulators’ long and arduous checks, and the crypto market crash ultimately made it tougher.

“Concord has been a strong partner and has added value throughout this process, and we will continue to benefit from the advice and support of Bob Diamond and the broader Concord team. We are disappointed the proposed transaction timed out; however, becoming a public company remains part of Circle’s core strategy to enhance trust and transparency, which has never been more important,” Circle CEO Jeremy Allaire.

He added that his company has “became profitable in the third quarter of 2022, with total revenue and reserve interest income of $274 million and net income of $43 million.”

In essence, a SPAC is a shell company that lists on a stock exchange with the purpose of buying another business and taking it public without consuming the time, costs and regulatory oversight required for traditional IPOs.

FTX’s fallout aside, the collapse of Circle’s merger is in line with the broader SPAC market, which has seen flurry of terminated deals in recent months due to unfavorable market conditions and waning investor sentiment. So with stocks tumbling, the sector is facing the same concerns about inflation and a looming recession on the horizon. At least 45 transactions between special-purpose acquisition companies and firms looking to go public have been canceled in 2022.

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