Acorns Bails on $2.2 Billion SPAC Deal

Last May 2021, it was announced that Acorns, a digital wealth management platform, would become a publicly traded firm in a SPAC deal valued at $2.2 billion.

Last week, it was announced the SPAC merger had been axed.

Pioneer Merger Corp (NASDAQ: PACX), the SPAC sponsor, filed an 8-K that announced the SPAC merger was off and the “parties agreed to mutually terminate” the deal.

Pioneer Merger Corp stated they would now seek another merger or acquisition partner within the previously defined time frame:

Pioneer intends to continue to seek a business combination with another operating company. As disclosed in the final prospectus relating to Pioneer’s initial public offering, filed on January 11, 2021 and subsequent filings with the Securities and Exchange Commission, if Pioneer has not consummated an initial business combination within 24 months from the closing of Pioneer’s initial public offering, Pioneer will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Class A ordinary shares sold as part of the units in Pioneer’s initial public offering, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in Pioneer’s trust account, including interest earned on the funds held in Pioneer’s trust account and not previously released to Pioneer to pay Pioneer’s taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding public shares of Pioneer, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Pioneer’s remaining shareholders and Pioneer’s board of directors, liquidate and dissolve, subject in each case to Pioneer’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

Acorns will now have to pay Pioneer $17.5 million in termination fees.

Acorns recently indicated its growing interest in challenging Robinhood (NASDAQ:HOOD) by offering direct trading in shares and, perhaps, to add crypto to the mix. The robo-advisor boasts over 9 million users that utilize its investing and banking services. Acorns operates both a FINRA regulated broker-dealer as well as a registered investment advisor. Banking services are provided in partnership with Lincoln Savings Bank.

If you look at Robinhood, the social investment platform is currently valued at $10.8 billion – dramatically more than Acorns – even being well off its IPO price (not to mention its 52 week high). While Robinhood has more than double the number of accounts at 22.4 million (18.9 monthly active users), the pricing of Acorns in the SPAC deal looks anemic in comparison.

Acorns CEO Noah Kerner told Reuters “given market conditions, we will be pivoting to a private capital raise at a higher pre-money valuation.” If Acorns can successfully offer single shares, crypto and other services like Robinhood – paying the $17.5 million penalty may look like peanuts in regards to a future funding round and potential IPO going forward.

 



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