After the boom in shell companies, the market has become sober. In the first quarter of 2023, only eight new shell companies were launched in the USA.
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Frankfurt Gebr. Schmid GmbH, a medium-sized German company, goes public on the New York Stock Exchange via a so-called US shell company. According to the company, based in Freudenstadt, it will be merging with Pegasus Digital Mobility Acquisition Corp.
According to the plan, the company plans to be listed on the New York Stock Exchange (NYSE) in the fourth quarter of 2023.
Founded in 1864 in the Black Forest, the Schmid Group is a global solution provider for the high-tech industry in the fields of electronics, photovoltaics, glass and energy systems. The group employs around 800 people worldwide.
Christian Schmid, CEO and Chairman of the Schmid Group, explains the goals associated with the listing on the New York Stock Exchange. He is certain that this move will further strengthen the group’s position as a global solution provider while accelerating its growth trajectory and innovative strength, he said.
The transaction values Schmid at an enterprise value of $640 million. Christian Schmid and Anette Schmid are expected to continue to hold the majority of the combined company’s equity following the closing of the transaction.
Now it is important to inspire investors
Stock exchange shells such as Pegasus, also known as “Special Purpose Acquisition Companies” (Spacs for short), are special purpose entities. Companies can use them to get onto the trading floor through the back door without the cumbersome process of a classic IPO.
Evaluation
640
million dollars
According to their own statements, Gebr. Schmid GmbH currently comes up with this sum.
First, a spac itself is listed on the stock exchange – an empty company shell, usually put on by prominent investors or ex-bankers.
Next, the Spac managers set their sights on a takeover or merger target. Other investors are then usually recruited in order to subscribe to a capital increase known as a pipe in advance of the acquisition. After the merger with the listed vehicle, the takeover target is then listed on the stock exchange and can subsequently raise further growth capital by issuing shares.
Easier access to capital is one advantage of being publicly listed, but US companies can also be overlooked by investors if there is too little research on the stock in question.
Spacs market has almost dried up recently
After the boom in shell companies, the market has become sober. In the first quarter of 2023, only eight new shell companies were set up in the USA after nine in the fourth quarter of 2022 and 44 in the first quarter of last year.
The peak was reached in early 2021 with 278 new Spac issues. According to S&P Global Market Intelligence, only $709 million was recently raised via Spacs compared to $8.59 billion in the same period in 2022.
The number of deals involving a Spac increased to 61 (22) transactions in the first three months, valued at $2.66 billion.
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