Syniverse's IPO plan sunk by SPAC strife
Syniverse's planned merger with M3-Brigade Acquisition II, a special purpose acquisition company (SPAC), fell apart this week, ending Syniverse's hopes of becoming a publicly traded company and raising more than $1 billion in funding.
"We are disappointed that recent changes in market conditions made it impossible to consummate our proposed merger, but Syniverse is a great company with a strong management team and we are confident that it has a very bright future," Mohsin Meghji, CEO of M3-Brigade, said in a statement.
"Although the parties collaboratively sought potential solutions in anticipation of high redemptions as a result of the recent turbulence in capital markets and growth stocks, these same conditions prevented the parties from reaching agreement on modifying the transaction terms," said Donald Morgan III of Brigade Capital Management, in the same statement.
Syniverse, which provides messaging, email and other services to mobile network operators and others, announced the merger in August. The deal valued the company at $2.85 billion and was supposed to provide Carlyle Group-backed Syniverse up to $1.2 billion in cash through a combination of equity and equity-linked capital.
"Going public allows us to capture those growth opportunities available to us. It's the right time in our life cycle, combined with the right time in the industry for Syniverse to go public," Syniverse CEO Andrew Davies told IPO Edge a week ago. "We've spent our time under private ownership increasing our scale, increasing some of our competencies, doubling down our enterprise segment to be much more than ready for the opportunities ahead of us."
In a release Friday, Syniverse acknowledged the situation and said it would pursue unspecified "additional financing transactions" that it would use to pay down its existing debt.
As Reuters noted, SPACs are publicly listed companies with no business operations that often serve as a vehicle for private firms to go public. According to Bloomberg, the number of shareholders in Syniverse's SPAC merger redeeming their stock for cash would have exceeded the minimum amount of capital needed for closing the deal. M3-Brigade will now seek a different target to take public while Syniverse will remain private.
Syniverse's deal with Twilio is still on, although with changes. Under Syniverse's original SPAC plans, announced last year, Twilio would have made an equity investment of up to $750 million in Syniverse, with a minimum commitment of $500 million.
During Twilio's quarterly call with investors this week, executives said the company will now make a minority investment into Syniverse instead. They also noted that Twilio will maintain its commercial wholesale agreement with Syniverse.
But that's where things end. "I know there is some press that they're suggesting that we might buy Syniverse. We're technically not doing that," said Twilio's Khozema Shipchandler during the company's quarterly conference call this week, according to a Seeking Alpha transcript of the event. "We have a great relationship with Syniverse. It's been very long standing, and we intend to continue that."
In its Friday release, Syniverse said Twilio would make a minority investment of up to $750 million in Syniverse, and Carlyle would remain Syniverse’s majority owner.
Importantly, Reuters noted that Syniverse's SPAC isn't the only one that's suffering from financial gyrations. For example, both Grab Holdings and BuzzFeed have seen their share prices plummet after going public via SPACs.
Indeed, in the telecom space, both Kore Wireless and Airspan recently went public via SPACs. Airspan's shares are now around $4 per share, well below the $10 per share at the time of its IPO last year. Similarly, Kore's shares debuted at around $7 per share but are now trading at around $5 per share.
Fixed wireless Internet provider Starry announced a plan in October to go public via a SPAC. Company officials said this week that Starry still expects to close that transaction by the end of March, as previously scheduled.
- Kore Wireless, now public, aims to be a 'one-stop-shop' for IoT
- Airspan to go public with $166M in pursuit of open RAN, 5G
- Syniverse to go public via SPAC merger
— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano