UPDATE 2-Telecom firm Syniverse, SPAC M3-Brigade scrap $2.85 billion merger
(Adds SPAC IPO details, context)
Feb 9 (Reuters) - Telecom services firm Syniverse Technologies and special purpose acquisition company M3-Brigade Acquisition II Corp have mutually terminated their $2.85 billion merger, the blank-check firm said on Wednesday, amid rising shareholder redemptions.
The decision to end the deal also comes against the backdrop of a steep decline in share prices of companies, including Grab Holdings Ltd and BuzzFeed Inc, that recently took the SPAC route to going public.
Market valuations of Grab and BuzzFeed have dropped 27% and 14% respectively this year, as a risk-averse sentiment hit the broader equities market, particularly technology stocks, due to an increasingly hawkish Federal Reserve.
M3-Brigade said that shareholder redemptions would have exceeded the level required for the deal to close, highlighting a recent trend that has deprived companies including BuzzFeed and Virgin Orbit of millions of dollars of cash.
A SPAC is a listed company with no business operations that seeks to merge with a private firm, taking it public in the process. As a SPAC's target company is not known at the time of its initial public offering (IPO), investors have the opportunity to redeem their shares prior to a merger at the original IPO price, typically a nominal $10 per share.
"Nobody on the MBAC team is happy to have a failed deal and rest assured that we will have alternative sources of financing in hand for our next proposed combination," said Donald Morgan III, chief investment officer at Brigade Capital Management, one of M3-Brigade's backers.
The parties had been seeking potential solutions to cushion the blow from high shareholder redemptions but couldn't agree on modifying the terms of the deal, Morgan III added.
M3-Brigade raised $400 million in its IPO last year, and has time until March 2023 to find another company to take public.
(Reporting by Niket Nishant in Bengaluru; Editing by Vinay Dwivedi)
