eToro downgrades IPO valuation to $8.8 billion, merger set to close in June

abdelaziz Fathi

eToro has lowered its going-public-through-SPAC valuation down to $8.8 billion from the earlier planned $10.4 billion, as market conditions change and SPACs face more headwind.

etoro

Israeli social trading network has also pushed back the completion of its reverse merger deal with US SPAC Fintech Acquisition Corp, the black check company backed by Betsy Cohen that is taking it public. Specifically, the deal deadline was extended from the earlier anticipated close on December 31, 2021 to June 30, 2022, though the two insist they will close the deal before that date.

According to its most recent filing with the US Securities and Exchange Commission, the merger plans were scheduled to terminate automatically on December 31, 2021.  Despite their ‘best efforts’, the parties haven’t satisfied the requisite closing conditions set forth in the original merger agreement, including eToro’s registration statement on Form F-4 to be effective.

That said, there are some financial changes in the newly restructured deal between the two parties. Calling it a “strategic revision of the transaction terms,” eToro is downgrading its pre-money valuation estimate from $9.301 billion to $7.906 billion. As such, the estimated implied post-money equity value of eToro is approximately $8.8 billion.

In addition, the number of price adjustment rights that correspond to the $17.50 price trigger issuable to eToro shareholders was reduced on a one-for-one basis for every warrant.

SPAC stock trades below $10

“Additionally, the investors party to the Amended Subscription Agreements will receive warrants to purchase common shares of eToro if, following the closing, the eToro closing stock price is equal to or greater than $17.50 over a specified period, which warrants have substantially similar terms to the terms of the Price Adjustment Rights. Under the Amended Subscription Agreements, as of the date of this communication, eToro has received commitments for $441 million in the aggregate,” the statement further reads.

Going public through a blank-cheque company was originally scheduled for a Q3 closing at a massive $10.4 billion valuation. However, meeting investors to pitch a direct listing has hit a bump and the deadline was pushed back to the fourth quarter as the SPAC boom was already fading away.

Although the merger plans have yet to be completed, the share of the SPAC has suffered low demand compared to where it had been when eToro originally revealed its IPO plan. As of writing, the stock is trading at $9.9, down by a third off the peak it hit in March at $15.29.

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