By
Bhushan Akolkar
April 23rd, 2024
Following a review with Concord, a SPAC, Circle now has a new valuation at $9 billion from the previous $4.5 billion.
Digital currency operator Circle Internet Financial recently announced a $9 billion company valuation under a new SPAC deal with Concord Acquisition Corp. According to Circle, the new deal comes after the termination of an earlier merger agreement that valued Circle at $4.5 billion.
Circle is currently looking to go public. Back in July 2021, the company announced plans to tap public markets via a Concord SPAC deal. Concord, which has former Barclays chief executive officer Bob Diamond as chairman, is a blank-check firm. Following the announcement, Concord’s shares were down approximately 3% at $10.20 in premarket trading.
The combined entity of Circle and the Concord SPAC could begin trading on the New York Stock Exchange by the end of 2022. However, this is also subject to a successful transaction conclusion, as well as shareholder and regulatory approvals. Concord’s Diamond weighed in on the development in a press statement, expressing optimism at Circle’s ability and competence in the financial landscape. As he put it:
“We continue to believe that Circle is one of the most interesting, innovative and exciting companies in the evolution of global finance and we believe it will have an historic impact on the global economic system.”
American multinational investment bank and financial services company Goldman Sachs is advising Concord in the deal.
Circle Gives Reason for Amendment of the Concord SPAC Deal
According to Circle, it amended the deal terms due to improved financial outlook and market share. Circle also explained that it overstated compensation expenses in financial filings for the previous deal. This resulted from a payroll issue and over-estimation of convertible debt holdings. In the December filing, Circle said:
“We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to the material weakness in its internal control over financial reporting or that they will prevent or avoid any potential future material weakness.”
The original sum raised by Concord in its December IPO last year was $276 million.
SPAC Challenges
Circle’s fresh deal is a favorable deviation in the broader SPAC landscape. This is because, in recent weeks, several similar merger initiatives have caved in. The reasons for this are numerous and range from unsavory market conditions to waning investor sentiment.
A SPAC is a shell company used to raise funds in an initial public offering (IPO). SPACS do this in order to merge with a private company and take it public.
USDC on the Crypto Market
According to data provider CoinGecko, USDC has a market capitalization of approximately $52.4 billion. Furthermore, since the announcement of Circle’s original deal with Concord, the number of USDC in circulation has more than doubled.