Wall Street's brief and heated love affair with SPACs (Special Purpose Acquisition Companies) continues to cool off.
The list of SPACs and technology companies that announced but then abandoned M&A plans involves such sectors as 3D printing, telecom services, robotics and e-commerce platforms. Take a closer look and $16 billion work of SPAC deals were cancelled from January through May 2022. The cancellations offer a cautionary reality check for MSPs and IT service providers that were exploring potential SPAC engagements.
Cancelled M&A: Technology Mergers That Weren't
Examples of cancelled M&A SPAC deals include these abandoned hookups:
- 3D Printing: Atlantic Coastal Acquisition Corp.'s deal to take Essentium public has been mutually terminated. Source: Reuters, February 11, 2022.
- Telecom Services: Syniverse Technologies and blank-check firm M3-Brigade Acquisition II Corp ended their merger agreement. Source: Reuters, February 9, 2022.
- IT Services: CAVU Technology Acquisition, a SPAC focused on the IT services market, abandoned its plan for a $100 million IPO (initial public offering) in January 2022.
- Software: Software firm Corcentric and blank-check firm North Mountain Merger said they would terminate their $1.2-billion merger deal. Source: Reuters, August 29, 2022.
- E-commerce and Hospitality Systems: HotelPlanner.com (parent of Meetings.com), Reservations.com and Astrea Acquisition Corp. canceled their M&A agreement. Source: Business Travel News, February 14, 2022.
- Robotics and Medical Equipment: Surgical robotics firm, Memic Innovative Surgery and Medtech Acquisition Corps announced mutually terminating a merger. Source: MD and DI, March 10, 2022.
The cancelation trend emerged in 2021. Indeed, 17 SPAC mergers, valued at a combined $37.2 billion, were terminated during the final six months of 2021, compared to four worth $720 million during the six months prior, according to data provided to Forbes by financial data firm Dealogic. Just seven SPAC deals were terminated in 2020, that Forbes/Dealogic report stated.
What Is A SPAC?
The SPAC trend was red-hot in early 2021. A SPAC or “blank check” company is designed to raise funds in an initial public offering (IPO) with the aim of acquiring a private business. That private company then becomes public as result of the merger, Reuters notes.
The SPAC trend helped to fuel $63 billion of IPO fundraising worldwide in January 2021, more than five times the proceeds from the same period a year earlier, Bloomberg reports.
However, the SPAC boom led to excess IPO supply that dragged down financial markets in early 2022, CNBC’s Jim Cramer said on January 25, 2022.
