425: Horizon Quantum to Go Public via dMY Squared SPAC Merger

Horizon Quantum Computing, a quantum software developer, will go public through a definitive business combination agreement with SPAC dMY Squared Technology Group, valuing Horizon at approximately $503 million.

Summary

• dMY Squared Technology Group, Inc. (dMY), a Massachusetts SPAC, has entered into a Business Combination Agreement with Horizon Quantum Computing Pte. Ltd. (Horizon), a Singapore-based quantum computing software developer.
• The transaction will result in a new publicly traded company named Horizon Quantum Holdings Ltd. (Holdco), whose Class A ordinary shares are expected to be listed on Nasdaq under the ticker HQ.
• The transaction values Horizon Quantum at approximately US$503 million.
• The Business Combination involves Holdco converting to a Singapore public company, Horizon and a Holdco subsidiary (Merger Sub 1) amalgamating, and dMY merging with another Holdco subsidiary (Merger Sub 2).
• Existing dMY and Horizon securityholders will become securityholders of Holdco.
• Holdco will adopt a dual-class share structure: Class A ordinary shares with one vote per share and Class B ordinary shares with three votes per share, primarily for the Founder.
• A new equity incentive plan will reserve 10% of fully diluted shares, with a 5% annual evergreen increase, and an employee share purchase plan will reserve 1.5% of fully diluted shares, with a 1% annual evergreen increase.
• The closing of the Business Combination is subject to shareholder approvals from both dMY and Horizon, and other customary closing conditions.

Sentiment

Score: 8

Explanation: The filing announces a strategic business combination in a high-growth, innovative sector (quantum computing software) with an experienced SPAC sponsor. Management comments are highly positive, emphasizing future growth and market potential. While standard risks are noted, the overall tone and strategic positioning suggest a strong positive outlook for the new entity.

Positives

• The transaction is expected to significantly accelerate Horizon Quantum's development of software infrastructure for quantum computing.
• The partnership with dMY Technology, a SPAC sponsor with a proven track record in the quantum computing market (e.g., IonQ), brings experienced leadership and strategic backing.
• The dual-class share structure allows the founder, Dr. Joe Fitzsimons, to retain significant voting control, which can support long-term strategic vision.
• The establishment of new equity incentive and employee share purchase plans is positive for talent attraction and retention in a competitive industry.
• The goal of creating a quantum operating system and software stack is described as elemental and compelling from a technological and investment perspective.

Negatives

• The filing does not provide specific financial projections or current revenue figures for Horizon Quantum, making it difficult to assess the $503 million valuation in detail.
• The transaction is subject to various closing conditions, including shareholder approvals and regulatory clearances, which introduce uncertainty.
• The reliance on future capital access and accelerated technological development to capitalize on quantum computing advancements implies significant future investment and execution risk.
• The 'Cautionary Note Regarding Forward-Looking Statements' highlights numerous risks that could materially affect actual results, including the ability to scale and grow the business profitably.

Risks

• The occurrence of any event, change, or circumstances that could lead to the termination of the Business Combination Agreement.
• The outcome of any legal proceedings that may be instituted against the parties following the announcement of the business combination.
• The inability to complete the business combination due to failure to obtain shareholder approvals or other closing conditions.
• Horizon Quantum's ability to scale and grow its business, and the realization of its expected growth.
• The cash position of Horizon Quantum following the closing of the business combination.
• The inability to obtain or maintain the listing of Holdco's securities on a stock exchange following the business combination.
• The risk that the announcement and pendency of the business combination disrupts Horizon Quantum's current plans and operations.
• The ability to recognize the anticipated benefits of the business combination, which may be affected by competition, Holdco's ability to grow and manage growth profitably, and source and retain key employees.
• Costs related to the business combination.
• Changes in applicable laws and regulations or political and economic developments.
• The possibility that Horizon Quantum may be adversely affected by other economic, business, and/or competitive factors.
• Horizon Quantum's estimates of expenses and profitability.
• The amount of redemptions by dMY Squared's public shareholders.
• Other risks and uncertainties included in the Risk Factors sections of dMY's Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and the Registration Statement.

Future Outlook

The combined entity, Horizon Quantum Holdings Ltd., expects to significantly increase its access to capital and accelerate its technological development timeline to fully capitalize on rapid advancements in quantum computing. The company aims to build the software infrastructure needed to achieve quantum advantage across a broad range of applications and lay practical groundwork for a true quantum operating system.

Management Comments

• Dr. Joe Fitzsimons, Founder and CEO of Horizon Quantum, stated: 'By bringing together languages, compilers, and a cross-hardware runtime environment, we are building the software infrastructure needed to achieve quantum advantage across a broad range of applications and laying practical groundwork for a true quantum operating system.'
• Dr. Fitzsimons also commented: 'By taking Horizon Quantum public now, we expect to significantly increase our access to capital and accelerate our technological development timeline to fully capitalize on the rapid advancements in quantum computing.'
• Dr. Fitzsimons expressed enthusiasm for the partnership: 'We are thrilled to be partnering with the dMY Technology team, a SPAC sponsor with a proven track record of success and a long-time investor in the quantum computing market.'
• Harry You, Chairman and CEO of dMY Squared, remarked: 'We believe application development is a key component in driving broader adoption of quantum computers to address critical real-world challenges.'
• Harry You added: 'We are excited to be partnering with the Horizon Quantum team, under Joes visionary leadership, to help make their mission of a common quantum software platform a reality.'
• Harry You concluded: 'The goal of creating a quantum operating system and software stack is elemental and compelling from a technological and investment perspective.'

Industry Context

This business combination positions Horizon Quantum Holdings Ltd. at the forefront of the rapidly evolving quantum computing industry, focusing on the critical software layer. While much industry attention has been on hardware development, Horizon Quantum aims to address the need for robust software infrastructure to unlock quantum computing's full potential. The involvement of dMY Technology Group, known for its successful SPAC mergers with other technology companies, including quantum computing firm IonQ, signals a strategic move to capitalize on the anticipated 'quantum advantage' in the coming years.

Comparison to Industry Standards

• dMY Technology Group has a track record of successful SPAC mergers with high-growth technology companies, including IonQ (NYSE: IONQ), a quantum computing company. This suggests a strategic alignment with industry trends in bringing innovative tech to public markets.
• The focus on developing an 'operating system and software stack' for quantum computing addresses a critical need, as the industry has historically prioritized hardware. This approach is comparable to how software ecosystems enabled the widespread adoption of classical computing hardware.
• The dual-class share structure, which grants the founder enhanced voting rights, is a common feature among technology companies going public, designed to maintain long-term vision and control.

Management Changes

Corporate Governance

Related Party Transactions

• The Business Combination Agreement includes provisions for the termination of certain contracts (Terminating Contracts) effective immediately prior to the Amalgamation Effective Time without further obligations.
• The Company Disclosure Schedule lists 'all Contracts that are between or among (x) the Company, on the one hand, and (y) any Company Shareholders, any of the Companys Affiliates (excluding the Company), or any current or former director, manager, officer or employee of the Company or any of its Subsidiaries, or any immediate family member or Affiliate of any of the foregoing (each, a Related Party), on the other hand, and (i) pursuant to which the Company or any of its Subsidiaries uses a property or right, tangible or intangible, that is owned by a Related Paty, (ii) pursuant to which any Related Party has any economic interest in any other Contracts of the Company or any of its Subsidiaries or any Contracts that the Company or any of its Subsidiaries or its or their respective assets and properties are bound, or (iii) in which a Related Party is a borrower or lender, as applicable, under any Indebtedness owed by or to the Company or any of its Subsidiaries, and in each case of clauses (i) through (iii), will survive the Closing and, in the case of each such Contract, has aggregate payments or receipts equal to or in excess of $120,000.'

Stakeholder Impact

• Shareholders of dMY Squared and Horizon Quantum Computing will become shareholders of the new public entity, Horizon Quantum Holdings Ltd., with their securities converted into Holdco Class A or Class B ordinary shares.
• Employees of Horizon Quantum Computing will benefit from new equity incentive and employee share purchase plans, and current officers will continue in leadership roles in Holdco.
• The Sponsor (dMY Squared Sponsor, LLC) will enter into a Lock-Up Agreement, Registration Rights Agreement, and a Sponsor Indemnification Agreement, providing certain protections and rights post-closing.
• Customers and suppliers of Horizon Quantum Computing may experience continuity or potential benefits from accelerated technological development and increased capital access for the combined entity.

Next Steps

• Holdco will convert from a Singapore private company to a Singapore public company and be renamed Horizon Quantum Holdings Ltd.
• Horizon and Merger Sub 1 will amalgamate, with Horizon surviving as a wholly-owned subsidiary of Holdco.
• Merger Sub 2 will merge with dMY, with dMY surviving as a wholly-owned subsidiary of Holdco.
• dMY's and Horizon's securityholders will become securityholders of Holdco.
• Holdco Class A ordinary shares are expected to be listed on Nasdaq under the ticker HQ.
• dMY, Horizon, and Holdco will jointly prepare and Holdco and Horizon will file a Registration Statement on Form F-4 with the SEC.
• The Registration Statement must be declared effective by the SEC.
• dMY will mail a definitive proxy statement/prospectus to its shareholders for a special meeting.
• dMY shareholders will vote on the Business Combination and other proposals at the Special Meeting.
• Horizon shareholders will provide approval for the Business Combination.
• Holdco (or a subsidiary) will enter into employment agreements with certain Horizon executive employees.
• Holdco will adopt a new equity incentive plan and an employee share purchase plan.
• Holdco, dMY, and Continental Stock Transfer & Trust Company will enter into a Warrant Assumption Agreement.
• Lock-Up Securityholders will enter into a Lock-Up Agreement with Holdco.
• Holdco, the Sponsor, the Founder, and the Company Shareholders will enter into a Registration Rights Agreement.
• Holdco and Horizon will enter into a Sponsor Indemnification Agreement with the Sponsor.
• The closing of the Business Combination is expected in the first quarter of 2026.

Key Dates

Recommendation

The business combination of dMY Squared, a SPAC with a strong track record in technology and quantum computing investments, and Horizon Quantum Computing, a developer of critical quantum software infrastructure, presents a compelling 'buy' opportunity. The strategic focus on the software layer of quantum computing addresses a significant market need and positions the combined entity for substantial growth as quantum hardware advances. The $503 million valuation, while requiring further financial detail, is for a company in a high-potential, transformative industry. The dual-class share structure, ensuring founder control, can be beneficial for long-term vision and execution. The experienced management teams and the clear path to a Nasdaq listing further enhance the investment appeal, despite inherent risks associated with early-stage, high-growth technology.

Keywords

Quantum Computing, Software Infrastructure, SPAC Merger, Horizon Quantum, dMY Squared, Nasdaq Listing, Technology Investment, Quantum Advantage, Software Development Tools, Corporate Governance