By Michael Scott
Circle officially confirmed the mutually terminating merger between Concord and Special Purpose Acquisition Company (SPAC). The issuer of USD stablecoin (USDC) disclosed on December 5 that it was ending a $9 billion deal with Concord.
Retracing the Merger Journey
The proposals for the merger deal began in July 2021 when Circle was valued at $4.5 billion. Later, Circle released an adjusted valuation of $9 billion in February 2022. Today, the USDC ranks second among the circulating stablecoin with a capitalization of $43 billion.
The agreement mandated Concord to consummate the merger transaction by December 10. Alternatively, it required Concord to seek shareholders’ votes for extending the period. Instead, Concord let the time limit lapse.
Circle chief executive Jeremy Allaire acknowledged the input of Concord for adding value and demonstrating a strong partnership. Besides, Allaire admitted the Concord team led by Bob Diamond conveyed beneficial advice.
Nevertheless, he expressed disappointment that the proposed merger acquisition was timed out. The executive emphasized that Circle will advance its core strategy of going public to nurture trust and transparency.
Dismissing Blame for Fallout
Allaire utilized the address to reiterate Circle’s performance in 2022. He pointed out that Circle turned profitable in quarter three, attributing the slag to the black swan-type episodes witnessed in 2022. Nonetheless, Circle has realized $274 million in earnings and reserve interest. Allaire indicated that that translates to a $43 million net income.
Besides, he lauded Circle’s capability to navigate the brutal crypto meltdown. Allaire added that Circle is currently holding $400 million of unrestricted cash. Allaire’s disclosure of financial health expresses optimism about Circle’s improved performance. Consequently, the revelation exonerates the USDC issuer from alleged financial distress amidst the contagion FTX Group collapse.
Possible Cause for the Merger Fallout
Although the stakeholders failed to disclose the reason for the merger fallout, Concord was concerned by the prevailing crypto winter. Elsewhere, the market slowdown is compelling a series of downward revisions of valuations.
Israeli-based cryptocurrency exchange eToro ended the $10 billion SCPAC merger citing the downward revision of the valuation in July. Previous SPAC mergers have exhibited poor performance. For instance, the IPOX-SPAC Index declined by 40% from February 2021, when it realized its peak.
Consequently, letting the merger time lapse suggests potential reconsideration of the crypto winter that the community anticipates to get colder.