Enchem to take Nasdaq listing via $400M reverse merger of US arm

What's the deal? South Korea's EnchemDealroom has a profile for this one. Try Dealroom → said on July 15 that its US subsidiary, Enchem America, will merge with a special purpose company (SPC) to be set up by Nasdaq-listed The Grow HubDealroom has a profile for this one. Try Dealroom →. In the reverse triangular merger, the SPC will dissolve while Enchem America survives, leaving Enchem with at least 85% of The Grow Hub as its largest shareholder.

How is it structured? The Grow Hub will issue new shares as consideration, cutting its existing shareholders to 15%. After completion, The Grow Hub will hold 100% of Enchem America, with Enchem controlling The Grow Hub and appointing its board.

What's the price? An external valuation put Enchem America — which makes and sells electrolytes — at $400 million, or roughly 596.88 billion won at the day's exchange rate. The merger date is set for October 8, though the merger ratio will be recalculated and disclosed once the SPC is established.

What's the endgame? Enchem said the deal gives it a route to raise capital in US markets and a base to expand its business there.

What could go wrong? The key variable is whether The Grow Hub keeps its Nasdaq listing. It has received a delisting notice for failing to meet minimum share-price and financial requirements, and the process is on hold pending a hearing before a Nasdaq panel.

The Grow Hub plans to argue that a share consolidation, the Enchem America merger, and planned investment will bring it back into compliance. If Nasdaq refuses continued listing or trading is suspended, the merger agreement can be terminated.

The signal: The move shows a Korean battery-materials maker using a distressed Nasdaq shell to reach US public markets, tying its American expansion directly to a listing that is not yet secure.

Read more: Edaily

Image credit: nakae