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SPAC TALK

Dog days of summer. Just as the unbearable heatwave afflicting the US and other parts of the globe may have a slowing effect on activity, there has been a slowdown in SPAC merger deal activity. Having just entered the last week of July, while the SPAC IPO market continues to trundle along (four priced in July), there has been a noticeable tamp down in merger deal flow. Only five new SPAC IBC deals have been announced so far this month, with the average value per deal at $364M. This compares with the monthly deal count running at 16 in five of the preceding six months. SPAC liquidations are also running a little off the pace than we have been used to in recent months. The number of liquidations completed and scheduled in July currently stands at 14 against a monthly average in the high double-digits in the first half of 2023. SPACs and publicly traded targets. One of the five SPAC IBCs announced in July involves a publicly traded target, natural psychedelic drug developer, Filament Health (FH/FLHLF). SPAC Talk Focus looks at the use of SPACs as fundraising and uplisting vehicles for publicly traded companies. While SPACs continue to predominantly target private companies for IBC partners, 5% of the SPAC deals announced since the start of 2022 involve small public companies principally trading on the OTC. In 2022, the percentage of public company targets was 4% rising YTD in 2023 to 9%. However, the high redemption environment is a challenge for public companies seeking to raise funds through a SPAC combintion. DWAC getting unwacked...for now. For SPAC DWAC the news for once has been deemed positive after announcing that it had come to a settlement with the SEC. The regulator alleged that the SPAC misled investors and the SEC by not disclosing that it had been in discussion with Trump Media & Technology Group (TMTG) as a potential IBC prior to the SPAC’ IPO and also failed to disclose a ‘material’ conflict of interest of DWAC’ CEO and Chairman. DWAC will pay an $18M fine if it completes the transaction. DWAC soared 50% on the settlement news, but the question remains whether this long-running transaction (announced in October 2021) will actually close by the SPAC’s extended deadline September 8, 2023. DWAC is looking to extend the deadline for another year, although TMTG is less enthusiastic about another extension.