Content recommendation startup Taboola’s merger with ION Acquisition Corp, a special purpose acquisition company (SPAC), is underway and its stock will begin trading on Wednesday on the NASDAQ stock exchange under the TBLA ticker.
On Monday night, Taboola and ION announced that ION’s shareholders provided the requisite approval to seal the deal, based on a valuation of $2.6 billion ($2.2 billion pre-money valuation).
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As part of the transaction, $526 million will be invested in Taboola, and existing shareholders will receive $100 million.
Investors include Fidelity Management & Research, Baron Capital Group and Blackrock.
Upon completion of the merger, Taboola founder and CEO Adam Singolda will hold 6% of the merged company, valued at $ 156 million. The company's president Eldad Maniv will hold 3.3% of the shares with a value of $ 86 million. Taboola's investors include Evergreen Venture Partners, whose holdings are now held by the Israeli funds Qumra Capital (11.6%, $301 million); Marker (7.2%, $187 million) and Pitango (5.9%, $153 million). Investor Zvi Limon owns 1.2% of the shares, with an expected value of $31 million.
The Marker first reported the merger between Taboola and ION in December. Taboola’s decision to go public came four months after a deal with Israeli firm Outbrain, its largest competitor, blew up.
Merging with a SPAC has become an increasingly popular alternative to rigors of doing an initial public offering (IPO), and offers a fast and lucrative route to secure investment. A SPAC is a shell corporation formed to raise money from investors and then has two years to find a private company to merge with. ION is run by Jonathan Kolber, Gilad Shany, Avrom Gilbert and Anthony Reich.
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The merger process with a SPAC is faster than normal and allows a company certainty in receiving a valuation. The reason is that SPACs have no need to try to convince many investors to invest in the company, only the SPAC managers who negotiate the conditions.
In the past, companies that merged with SPACs were struggling to have a regular IPO and had a negative image, but last year the number of SPACs soared as well as the amounts that they raised, making it a suitable alternative to a traditional IPO.