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Grab’s US$40 billion merger runs into ‘unsurprising’ issues

The self-described super app was supposed to close its transaction with blank-cheque firm Altimeter Growth Corp by July this year.

Source: Bloomberg
  • Grab Holdings is now looking at a Q4 2021 completion date for its merger with special purpose acquisition company (SPAC) Altimeter Growth Corporation
  • The delay is caused by missing financial information for the last three years
  • One analyst said the hiccup is ‘unsurprising’, with US regulators stepping up their checks due to the influx of SPACs
  • Learn how you can buy and sell Grab shares before and after the merger by opening an IG account

Grab delays blank-cheque merger to Q4 of 2021

Grab Holdings has pushed back the completion date of its merger with SPAC Altimeter Growth Corp and initial public offering (IPO) to the fourth quarter of 2021, citing an ongoing financial audit for the past three years.

The ride-hailing and food delivery platform said in a statement to Reuters that the delay is due to missing financial information for 2018, 2019 and 2020 that are required by the US Securities and Exchange Commission (SEC).

The Singapore-based firm is also ‘working with the SEC to obtain pre-clearance of certain accounting policies and related financial disclosures’, the report stated.

Grab had initially expected the transaction with Altimeter to close by July this year.

Why the delay is ‘not completely unsurprising’

According to Bloomberg Intelligence analyst Matthew Kanterman, the delay is ‘not completely unsurprising’. With the number of pre-deal blank-cheque companies trading on US stock exchanges now sitting at above 500, regulators have stepped up their due diligence procedures.

‘The audit process can take several quarters, especially if there needs to be back and forth with the SEC over certain accounting decisions and policies,’ Kanterman said.

Grab said in April that the IPO-intended merger will value it at almost US$40 billion, more than double its valuation of over US$16 billion in 2020.

This is expected to make the transaction the world’s largest SPAC deal ever.

The combined entity’s securities will then trade under the ‘GRAB’ ticker symbol on Nasdaq.

Anthony Tan, Grab’s CEO, will control 60.4% of the company’s voting power following the deal.

How to trade or invest in Grab shares

You can trade or invest in the Grab SPAC, Altimeter Growth Corporation, before the merger with us.

You'll also be able to take a position on Grab shares once the merger is complete.

Ready to get started? Open an IG trading account.

What’s to like about the SPAC deal?

S&P Global said previously that Grab’s ‘backdoor-style IPO’ and the expected US$4.5 billion cash proceeds will erase its refinancing risk in 2023, and support its cash burn.

Grab’s 2023 maturity wall comprises convertible redeemable preference shares, and the redemption rights of these bond holders will fall away with a public listing as they are converted into equity.

Moody’s Investors Service placed Grab’s ratings under review for upgrade. ‘Grab’s public listing will add US$4-4.5 billion of liquidity buffer upon completion, which will support the company’s growth plans,’ wrote Moody’s analyst Stephanie Cheong.

Grab also provided an update on its consolidated gross merchandise value for the first quarter of 2021 which came in 5.2% higher year-on-year at US$3.6 billion, it shared in this latest statement.

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