Strong Reverse Merger and SPAC Activity in First Quarter; The Reverse Merger Report Finds 'APOs' Outpace Traditional IPOs, and Record Levels of Merger Announcements Among SPACs.SAN FRANCISCO San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden -- Reverse mergers between private companies and publicly traded shells outnumbered traditional IPOs in the first quarter, with 46 reverse mergers compared to 44 IPOs, according to The Reverse Merger Report, a DealFlow Media publication. The alternative public offering (APO apo- 1 A prefix indicating a protein component in a conjugated molecule–eg, apoferritin, apolipoprotein, see there 2 Apolipoprotein, see there ) market's first quarter activity brought companies public totaling $1.31 billion in aggregate market cap. While reverse mergers outpaced traditional IPOs during the quarter, reverse merger activity and deal value dipped compared to the previous quarter, which closed 54 mergers worth about $3.22 billion. Nearly 35% of reverse mergers in the first quarter also included a concurrent private placement financing to fund the merger and provide working capital after the merger's completion. Deals featuring a contemporaneous PIPE investment included Zhongpin (ZHNP.OB), which issued $27.6 million in convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". and warrants, and Zeolite zeolite Any member of a family of hydrated aluminosilicate minerals that have a framework structure enclosing interconnected cavities occupied by large metal cations (positively charged ions)—generally sodium, potassium, magnesium, calcium, and barium—and water Exploration Co. (ZXPL.OB) which issued $15 million in common stock. More than 20% of deals involved a foreign-based private company seeking a U.S. listing, with Chinese companies accounting for 60% of foreign deals. Health care and consumer product and service companies accounted for many of the reverse mergers during the first quarter. "Quarterly shell merger activity remains at the high end of the range experienced over the past two years," said Brett Goetschius, publisher of The Reverse Merger Report. "The decrease in deals over the fourth quarter merely reflects the seasonality of the market and a one-time surge in closings resulting from a change in SEC reporting requirements that went into effect in November, which encouraged many companies to rush deals to market prior to the effective date." Specified purpose acquisition companies (SPACs) once again represented one of the most active areas of the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. market, accounting for 22% of all IPOs during the first quarter. Ten SPACs finalized initial public offerings in the quarter, raising $900 million. The number of SPACs completing IPOs increased 25% compared to the previous quarter. There were six new initial offering registration filings made by SPACs during the quarter, a slight decrease from the previous quarter's seven filings. If all six of the new SPACs reach market, they will have raised $469 million. All six of the SPACs included a private placement by management or institutional investors funded concurrent with the public offering. At the close of the quarter, there were more than 35 SPACs still in registration. It took an average of nearly six months from the time a SPAC SPAC Saratoga Performing Arts Center (New York) SPAC Special Purpose Acquisition Company SPAC Sustainable Production and Consumption SPAC Student Professional Awareness Conference SPAC State Public Affairs Committee filed to go public to the time of its IPO - 70% longer than the previous quarter's average. A record five SPACs announced merger deals with private companies in the first quarter, a 25% increase over last quarter and only 27% fewer deals than in all of 2005. Three foreign-focused SPACs announced deals, as well as Services Acquisition Corp. International (SVI SVI Serveur Vocal Intéractif (French) SVI Sludge Volume Index (biological wastewater treatment - clarifiers) SVI Shareholder Value Index SVI Schweizerischer Verband der Informatikorganisationen ), which plans to acquire the Jamba Juice smoothie smooth·ie also smooth·y n. pl. smooth·ies Slang 1. A person regarded as being assured and artfully ingratiating in manner. 2. A smooth-tongued person. chain, and Platinum Energy Resources (PGRI PGRI Public Gaming Research Institute PGRI Plant Genetic Resources Institute (Korea) .OB), which aims to merge with a subsidiary of Tandem Energy Holdings (TDYH.PK). "First quarter SPAC IPO and merger activity reflects a sustained interest by hedge funds and private equity funds in employing blank check Blank check A check that is duly signed, but the amount of the check is left blank to be supplied by the drawee. vehicles to bring public profitable companies valued at $50 million to $500 million," said Goetschius. "Additionally, venture capital investors have recently discovered SPACs as an alternative path to liquidity for venture-backed companies shut out of the traditional IPO market." About DealFlow Media: DealFlow Media publishes The Reverse Merger Report, a quarterly newsletter which tracks the market for alternative public offerings, including reverse mergers, blank check offerings Blank check offering An initial public offering by a company whose business activities are undefined and therefore peculative. , self-filings and shell companies. The company also hosts The Reverse Merger Conference, the premier semi-annual event for the alternative public offerings market. For more information, go to http://www.dealflowmedia.com. |
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