TradeZero Holding Corp and Dune Acquisition Corporation (NASDAQ:DUNEU), a special purpose acquisition company, announced that they have entered into a definitive agreement for their business combination, which would result in TradeZero becoming a publicly listed company.
The combined company will be called TradeZero Global Inc. upon the closing of the business combination and is expected to be listed on the New York Stock Exchange under a new ticker symbol, “TRAD”.
TradeZero was founded in 2015 by a team that leveraged decades of collective operating and trading experience to build a next-generation trading platform tailored to the needs of the ever-growing community of sophisticated traders. TradeZero’s offering includes U.S. equities, equity options, and its proprietary Short Locate Services (U.S. patent pending).
Carter Glatt, Founder and CEO of Dune, commented:
“We are excited to partner with Daniel, Kosta Corriveau, and the rest of TradeZero’s management team to bring this next-generation trading platform to the public markets. A founder-led business, TradeZero is a scaled, growth asset with superior operating margins and a differentiated product offering.
Complemented by Dune’s synergistic thought leadership in Fintech and coupled with the powerful secular tailwinds of the rise of the retail trader and an attractive entry valuation relative to publicly-traded peers, we believe that a combination with TradeZero will provide significant value to our public investors.”
Under the terms of the proposed business combination, Dune will merge with TradeZero at a pro forma combined enterprise value of approximately $556 million and equity value of $716 million (assuming no redemptions), representing a price-to-earnings multiple of 14.9x projected net income for 2022.
Cash proceeds of the business combination will fund up to $160 million of cash to TradeZero’s balance sheet. The cash components of the transaction will be funded by Dune’s cash in trust of $172.5 million (assuming no redemptions). The balance of the consideration to TradeZero’s equity holders will consist of equity in the combined company.
Existing TradeZero equity holders, including the management team, will roll 100% of their equity into the combined company and will remain the largest stockholders with approximately 70% of ownership immediately following the business combination (assuming no redemptions by Dune’s stockholders).
Existing TradeZero equity holders have the potential to receive an earnout for additional shares of common stock if certain price targets are met as set forth in the definitive merger agreement.
The business combination is expected to close in the first quarter of 2022 and remains subject to approval by Dune’s stockholders and customary closing conditions.