SPAC deal collapse sends Pomvom’s stock into freefall
SPAC deal collapse sends Pomvom’s stock into freefall
Nasdaq aspirations dashed as digital photography company’s shares plummet 34.5%
Pomvom, a developer of digital photography solutions for theme parks, saw its shares fall by 34.5% in Tel Aviv trading following the cancellation of a merger agreement that was expected to lead to its listing on Nasdaq.
At the end of 2023, Pomvom signed a non-binding letter of intent for a merger with a SPAC (Special Purpose Acquisition Company) issued by former minister Izhar Shay on Nasdaq in early 2023, under the name Israel Acquisitions Corp. The merger was to be executed at a valuation of $125 million (approximately NIS 500 million) for Pomvom, which was trading on the Tel Aviv Stock Exchange at a market value of just NIS 41.5 million prior to the merger announcement.
This valuation was well below the company’s peak value, as well as the value at which it began trading on the Tel Aviv Stock Exchange. Pomvom, whose largest shareholder is More Investment House (18.5%), started trading on the Tel Aviv Stock Exchange in March 2021 during a major IPO wave, at a valuation of NIS 135 million, after raising NIS 38 million in an IPO at a value of NIS 97 million.
The company later reached a record value of NIS 454 million, which began to decline rapidly with the increase in interest rates aimed at combating inflation. In February, as the merger process progressed, the company’s value rose to NIS 124 million, but has since dropped to NIS 61 million yesterday, and further to NIS 35 million today, despite Pomvom's update in April on further progress toward the merger.
In explaining the cancellation of the merger, Pomvom and Shay cited that "the current state of the capital markets does not allow for the transaction to proceed at this time based on the same financial parameters that had been agreed upon originally.”
Founded in 2015, Pomvom provides its solutions to 51 theme parks across Europe, the USA, and Japan. Its clients include major chains like Six Flags and Warner Bros., which operates the Harry Potter park in London. In 2023, Pomvom's revenues amounted to NIS 218 million, a 13% improvement over the previous year, but it ended the year with an operating loss of over NIS 22 million.
Shay's SPAC was issued in early 2023 and raised $143 million.
Pomvom stated, "The company is a leader in technological innovation for the photography experience in the world’s largest amusement parks and attractions. Given the volatility in the global and American capital markets, the company has announced the cancellation of the SPAC deal. The company continues to hold contracts with leading international entities in the field and remains committed to professional operations and raising the capital required to ensure its continued growth and expansion."
