In keeping with a brand new press launch revealed on Dec. 5, USD Coin (USDC) issuer Circle introduced the mutual termination of its proposed merger with particular function acquisition firm, or SPAC, Harmony Acquisition. The deal was introduced in July 2021 with a preliminary valuation of $4.5 billion and was then amended in February 2022 when Circle’s valuation ballooned to $9 billion. USDC is presently the second largest stablecoin in circulation, with a market cap of $43 billion.
Beneath the phrases of the agreements, Harmony had till Dec. 10 to consummate the transaction or search a shareholder vote for an extension. Nonetheless, it seems that Harmony selected to have the time restrict lapse as a substitute. As advised by Circle CEO Jeremy Allaire:
“Harmony has been a robust associate and has added worth all through this course of, and we’ll proceed to learn from the recommendation and assist of Bob Diamond and the broader Harmony staff. We’re dissatisfied the proposed transaction timed out; nonetheless, changing into a public firm stays a part of Circle’s core technique to boost belief and transparency, which has by no means been extra vital.”
Circle additional reiterated that it “turned worthwhile within the third quarter of 2022, with complete income and reserve curiosity revenue of $274 million and web revenue of $43 million.” The corporate presently has $400 million in unrestricted money.
Whereas the stakeholders did not immediately state the explanation behind the deal’s fallout, the continuing crypto winter has led to a spiral of downward revisions for a lot of firms’ valuations. On high of that, SPAC mergers have additionally carried out poorly, with the IPOX SPAC index benchmark falling over 40% since reaching all-time highs in February 2021. Likewise, Israeli cryptocurrency change eToro terminated its $10 billion SPAC merger this July after a downward revision to its valuation.
