Circle and special purpose acquisition company, Concord Acquisition announced that the two companies mutually ended a merger.
The agreement, which had an initial valuation of $4.5 billion when it was disclosed in July 2021, was later revised in February 2022 after Circle’s valuation increased to $9 billion.
At the moment, USDC is the second-largest stablecoin in use, with a $43 billion market valuation. According to the agreements, Concord had until December 10 to complete the acquisition or ask shareholders for a vote to extend the deadline.
It appears, though, that Concord opted to let the time restriction expire. According to Jeremy Allaire, CEO of Circle:
“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 further reiterated that it “became profitable in the third quarter of 2022, with total revenue and reserve interest income of $274 million and net income of $43 million.” The company currently has $400 million in unrestricted cash.
The prolonged crypto winter has resulted in a downward spiral of modifications to many companies’ values, even though the stakeholders did not directly address the cause of the deal’s failure.
SPAC acquisitions have additionally underperformed, with the benchmark IPOX SPAC index losing over 40% since hitting all-time highs in February 2021. Similar to this, in July 2018, Israeli cryptocurrency exchange eToro canceled its $10 billion SPAC merger following a decrease in valuation.
Circle Remains Committed To Its Decision To Go Public
With the acquisition, the stablecoin issuer would have been able to become a publicly traded company and join Coinbase, the leading cryptocurrency exchange in the US. Furthermore, this would have even increased Circle’s estimated value to $9 billion.
The CEO of Circle, Jeremy Allaire, stated in a press release that the company’s plan to go public is still on the table despite the deal falling through. He stated:
“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”
Allaire also used Twitter to elaborate on the contract that was canceled. The firm was unable to complete the “SEC qualification,” according to the CEO, which was necessary to close the acquisition.
The US regulatory authority, according to Allaire, was “rigorous and thorough in understanding” the company and the various facets of the cryptocurrency market. He continued by saying that these actions were necessary to “ultimately provide trust.”
The CEO also discussed the company’s Q3 results. He said that it generated $274 million in sales, of which $43 million was net revenue.
“While there are a lot of challenges within the crypto and blockchain industry, I am of the very firm conviction that we are going to decisively leave the speculative value phase and enter the utility value phase, and stablecoins such as USDC will play a huge part.”
