Circle, the USDC stablecoin issuer, has terminated its agreement with special-purpose acquisition company (SPAC) Concord Acquisition Corp. This deal would have aided it in going public as earlier planned.
According to PR newswire, the decision to terminate was approved by the Board of Directors of both Concord and Circle, ending the proposed business combination initially announced in July 2021 and amended in February 2022.
Circle is a global financial technology company that helps businesses leverage digital currencies and public blockchains for peer-to-peer payments, commerce, and financial applications. It is the issuer of the second largest stablecoin, USD coin (USDC), and has a zero-fee policy on transactions and transfers.
The firm was founded in 2013 by Jeremy Allaire and Sean Neville before it was acquired by Concord Acquisition Corp., a particular purpose acquisition company (SPAC), in 2021 for a deal valued at $4.5 billion.
Circle announced its plan to become public with Concord Acquisition Corp last year, with the transaction valued at $4.5 billion.
$9 Billion Plan Down The Drain
As stipulated by the amended agreement, Concord has until December 10, 2022, per the terms of its amended and restated certificate of incorporation, to consummate a business combination.
The transaction agreement also stipulates that if the Securities and Exchange Commission (SEC) has declared the S-4 registration statement for the business combination effective, Concord can seek shareholder approval to extend the termination date to January 31, 2023.
Sources state that the plan to go public had been pushed from an earlier date to December 10- following the renegotiations- with Circle citing delays at the Securities and Exchange Commission (SEC).
“Circle continues our collaborative work with the SEC to complete the qualification process as we look forward to becoming a listed company. We appreciate that the SEC is being thorough as they navigate fairly novel businesses that want the trust, transparency, and accountability that come with being a public company,” a spokesperson had spoken on behalf of the firm.
However, Concord’s inability to consummate the business combination and the SEC’s delayed approval canned the deal that would have placed Circle’s value at $9 billion.
“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,” Jeremy Allaire, Co-Founder, and CEO of Circle, said.
“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 plays a crucial role in the blockchain’s disruption of financial services,” Bob Diamond, Chairman of Concord Acquisition Corp, explained.
“I remain confident in Circle’s regulatory-first approach to building trust and transparency in the financial industry, which has never been more important. I will continue advocating for the company as it continues to grow.”
Other SPAC Deals Fall Through
Special-Purpose Acquisition Companies (SPAC) may have been the craze in 2021 for companies looking to go public, but the hype has died down due to the SEC’s heavy crackdown and the downturn of the crypto markets.
Circle is one of many corporations with canceled deals, as the media outlet Forbes recently backed down from a plan to go public via a SPAC at a $630 million valuation.
Trading platform EToro’s planned public listing was terminated in July following a proposed merger initiated last year.
Speaking on behalf of the other party, Betsy Cohen, chairman of Fintech V, said, “The transaction has been rendered impracticable due to circumstances outside of either party’s control.” The decision to terminate was also mutual.
Bitcoin (BTC) mining company PrimeBlock ended plans to go public through a merger with blank check company 10X Capital Venture Acquisition (VCXA) that would have happened on August 12.
No official reason was given, but the agreement was by mutual consent from both parties.
Circle’s Net Profit For Q3
In a Twitter post, Allen confirmed that his company did not complete SEC qualifications, adding that the SEC’s review was “necessary to ultimately provide trust, transparency, and accountability for major companies in crypto.”
In addition, Allen stated that Circle is now profitable, having earned a net profit of $43 million in the third quarter with total revenue of $274 million and ~$400M in balance.
“We are strong, growing, profitable, and in the best financial position we’ve ever been in,” he added.