Circle, the issuer of USD Coin (USDC), announced the mutual termination of its proposed merger with special purpose acquisition company (SPAC) Concord Acquisition on December 5th. The deal was announced in July 2021 at a preliminary valuation of $4.5 billion and was then amended in February 2022 when Circle’s valuation increased to $9 billion. USDC is currently the second largest stablecoin in circulation, with a market capitalization of $43 billion.
Under the terms of the agreements, Concord had until Dec. 10 to complete the transaction or seek a shareholder vote for an extension. However, it appears that Concord chose to have the deadline run out instead. As told by Circle CEO Jeremy Allaire:
“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 wider Concord team. We are disappointed that the proposed transaction was delayed; to be however, a public company remains part of Circle̵[ads1]7;s core strategy to increase 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 reserved interest income of $274 million and net income of $43 million.” The company currently has $400 million in unrestricted cash.
While the stakeholders did not directly state the reason behind the deal’s fallout, the ongoing crypto winter has led to a spiral of downward revisions for many companies’ valuations. On top of that, SPAC mergers have also underperformed, with the IPOX SPAC Index benchmark down over 40% since hitting all-time highs in February 2021. Similarly, Israeli cryptocurrency exchange eToro closed its 10 billion SPAC merger dollar in July after a downward adjustment. to its valuation.