After media reports of eToro’s possible merger with a blank-check acquisition company, another update came, creating a buzz in the market. Bloomberg recently reported that the Israeli broker is planning to merge with FinTech Acquisition Corp. V, a firm led by serial deal-maker, Betsy Cohen.
The report outlined that the companies are raising around $650 million in equity to support the deal. If the deal is sealed, the two companies could be valued at $10 billion.
Though eToro maintained its stance of not commenting on ‘market rumours’, the anonymous sources of the publication expect an official announcement soon.
The Market Is Already Reacting to the Possible Deal
Cohen, who is a well-known business person, is heavily involved in the recent boom of special-purpose acquisition companies, popularly known for its acronym SPACs. These shell companies go public with only intentions of merging with operational companies in a specified period, or else they have to return the investors money.
The SPAC, with which eToro is reportedly considering its merger, raised $250 million in December. The share prices of the SPAC jumped by 40 percent in Monday’s aftermarket trading hours following its possible deal with eToro.
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eToro has become one of the major trading platforms in Europe and other parts of the world. It is often seen as the non-American alternative to Robinhood. However, the business model of the two differs a lot.
While Robinhood makes money with the controversial payment for order flow, eToro earns from bid-ask spreads. Additionally, the Israeli platform has a vast offerings list and now has 20 million users globally.
Established as a social trading platform, which allows the copy of the expert investors’ portfolio, eToro handled $1.5 trillion in trading volume last year and reported revenue of $600 million.
Meanwhile, private investors are reportedly trading eToro shares at a valuation of $2.5 billion, while the company was officially valued at $800 million in its last funding round.