Irish-led blank check firm in fresh tie-up talks as liquidation looms

An Irish-led so-called blank check company that floated in New York last year is in advanced talks with a new merger target, following the collapse an agreed $1.74 billion (€1.76 billion) tie-up during the summer amid volatile equity markets, according to sources.

Known as a special purpose acquisition company (Spac) or blank cheque firm, North Atlantic Acquisition Corporation (NAAC), founded by Irish packaging industry veteran Patrick Doran and corporate financier Gary Quin, only has three months to cement a deal or face liquidation.

“The company’s stated aim has always to complete a business combination. That hasn’t changed,” said a spokesman for NAAC, who declined to comment on the current talks.

NAAC raised $380 million (€381.3 million) in an initial public offering (IPO) in January 2021 with a view to acquiring an operating company that was seeking a stock market listing. It agreed last December to merge with Telesign, a digital identity verification company owned by Brussels-based Proximus. However, that was called off in June.

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NAAC gave itself 24 months from the time of its IPO — until January 26th, 2023 — to conclude a merger, or face winding up and repaying investors by buying back its stock, according to its flotation prospectus. It would need shareholder approval to extend the deadline to complete a deal.

Spacs have been a periodic feature of international stock markets for more than three decades, but were one of the hottest crazes on Wall Street in 2020 and 2021. They have fallen out of favour this year amid declining stock markets and rising oversight of this area by US regulators.

The Nasdaq Composite index has slumped 31 per cent so far this year, while the S&P 500 has declined by 21 per cent, as investors fret about soaring inflation, rising interest rates, and a rapidly deteriorating economic outlook.

There are more than 500 blank check firms — including NAAC — looking for a merger partner with more than $150 billion (€150.3 billion) in cash they need to deploy, according to data from SPAC Research.

The natural wind-up of Spacs that have failed to secure a deal within the typical 18-24 months set for themselves to complete a combination has been accelerated recently as US vehicles face a 1 per cent excise tax from January on share repurchases.

A total of 27 SPAC deals, worth about $13 billion (€13.04 billion), have been liquidated so far this year, according to SPAC Research.

Bloomberg’s De-Spac Index, which charts the performance of 25 companies that went public by merging with a blank-cheque company, has slumped 66 per cent so far this year.

The original “sponsors” of NAAC, mainly made up of Mr Doran and his family, were on track have a 4.9 per cent stake, valued at $85 million (€85.3 million), in the combined group after the ill-fated Telesign merger, according to figures in presentations relating to the transaction.

While the sponsors paid only $25,000 (€25,092) for the shares, they are worthless if a replacement deal is not completed and NAAC ends up being liquidated.

Mr Doran sold his Dublin-based packaging company Americk to Spanish group Saica in 2016 for an undisclosed sum. He is founder and chief executive of Woodberry Capital, a private investment company that has put money to work in sectors including logistics, technology and construction.

Mr Quin was vice-chairman of Credit Suisse’s investment banking division in Europe from 2010 to December 2019, and was involved in IPOs of Hibernia Reit, Irish Residential Properties Reit, Cairn Homes and Glenveagh Properties.