eToro valuation halved as SPAC merger deadline expires

abdelaziz Fathi

The deadline for the completion of the SPAC merger of eToro had passed yesterday, June 30, and the Israeli broker apparently canceled the deal with Betsy Cohen-backed blank-check firm.

A spokesperson for eToro told The Information that it would be “sharing an update in the coming days.”

eToro abandoned its plans to go public even after it lowered its SPAC valuation down to $8.8 billion from the earlier planned $10.4 billion, as market conditions changed and SPACs face more headwind. Worse still, the social investment work is reportedly in talks to close a private funding round of roughly $1 billion, but at only $5-6 billion valuation.

Going public through a blank-cheque company was originally scheduled for a Q3 2021 closing. 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.

On a last-ditch attempt, eToro 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 claimed they want to close the deal before that date.

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.

Calling it a “strategic revision of the transaction terms,” eToro downgraded its pre-money valuation estimate from $9.301 billion to $7.906 billion. As such, the estimated implied post-money equity value of eToro was 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.

As a result, the share of the SPAC had suffered low demand compared to where it had been when eToro originally revealed its IPO plan. As of June 29, the stock was trading at $9.85, down by a third off the peak it hit in March at $15.29.

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