425: Fold, a Bitcoin Financial Services Company, Announces Plans to Go Public via Merger with FTAC Emerald Acquisition Corp.

Fold, a bitcoin financial services company, is set to go public through a merger with FTAC Emerald Acquisition Corp., aiming to expand access to bitcoin investment opportunities.

Summary

• Fold, Inc., a bitcoin financial services company, and FTAC Emerald Acquisition Corp. have announced a definitive agreement for a business combination that will result in Fold becoming a publicly-listed company.
• The combined company intends to remain listed on NASDAQ under a new ticker symbol.
• Fold, founded in 2019, integrates bitcoin across traditional financial services, offering customers ways to accumulate, manage, and spend bitcoin through rewards, debit cards, and bill pay services.
• Since its inception, Fold has processed over $2 billion in volume and distributed over $45 million in bitcoin rewards.
• The transaction implies a pre-money equity valuation for Fold of $365 million.
• Post-transaction, Fold is expected to have over 1,000 BTC on its consolidated balance sheet.
• Existing Fold stockholders are expected to own approximately 71% of the combined company's outstanding shares.
• The transaction is expected to close in the fourth quarter of 2024, subject to regulatory and stockholder approvals.
• Fold's management team, led by CEO Will Reeves, will continue to operate and manage Fold after the closing.
• The company plans to use the proceeds to accelerate the growth of its operations and treasury.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for Fold's future, highlighting its first-mover advantage, strong customer base, and potential for growth in the bitcoin financial services market. The merger with FTAC Emerald is expected to provide the company with the capital and resources to accelerate its expansion plans.

Positives

• Fold has a first-mover advantage in the bitcoin financial services space.
• The company has a strong reputation with institutions for partnering with quality companies.
• Fold has a large and engaged customer base with potential for cross-selling additional financial products.
• The company has a clear product roadmap for expanding its financial services offerings.
• Fold's business model aligns its success with the success of its customers through bitcoin rewards.
• Fold has a visionary leadership team with experience in payments, blockchain, and venture capital.
• Fold's bitcoin rewards have outpaced inflation and typical credit card perks since Q3 2019.
• Fold democratizes wealth creation by aiming to make bitcoin accessible to everyone.

Negatives

• The transaction is subject to regulatory and stockholder approvals, and customary closing conditions.
• The company's future performance is subject to risks and uncertainties, including competition and changes in the regulatory landscape.
• The forward-looking statements are based on assumptions that may prove to be incorrect.
• The financial information presented is unaudited and does not conform to Regulation S-X.
• The company's estimates of expenses and profitability may be inaccurate.

Risks

• The proposed transaction may not be completed in a timely manner or at all.
• The failure to satisfy the conditions to the consummation of the proposed transaction, including the approval of the proposed transaction by the stockholders of FTAC Emerald and the receipt of certain governmental and regulatory approvals.
• The failure to realize the anticipated benefits of the proposed transaction.
• The effect of the announcement or pendency of the proposed transaction on Fold's business relationships, performance, and business generally.
• The outcome of any legal proceedings that may be instituted against FTAC Emerald or Fold related to the business combination agreement or the proposed transaction.
• The ability to maintain the listing of FTAC Emerald's securities on the NASDAQ.
• The ability to address the market opportunity for Fold's products and services.
• The risk that the proposed transaction may not generate the expected net proceeds for the combined company.
• The ability to implement business plans and other expectations after the completion of the proposed transaction, and identify and realize additional opportunities.
• The occurrence of any event, change or other circumstance that could give rise to the termination of the business combination agreement.
• The risk of downturns, new entrants and a changing regulatory landscape in the highly competitive industry in which Fold operates.

Future Outlook

Fold plans to expand its suite of bitcoin financial services to include credit cards, loans, and business accounts, aiming to capture a larger share of its customers' financial needs and increase its bitcoin treasury.

Management Comments

• Will Reeves, CEO of Fold: 'This transaction represents a significant step in Fold's mission to expand access to premium bitcoin financial services and empower individuals to achieve their dreams.'
• Bracebridge (Brace) Young, Jr., President and CEO of FTAC Emerald: 'Fold has aligned its success with the success of its customers, democratizing wealth building with innovative bitcoin financial services while gaining a larger and larger wallet share as the preferred bitcoin savings tool.'

Industry Context

This announcement comes amid increasing interest in bitcoin and its integration into traditional financial services. Fold's approach of offering bitcoin rewards and integrating bitcoin into everyday financial transactions positions it as a key player in the growing bitcoin ecosystem.

Comparison to Industry Standards

• MicroStrategy, a company known for holding a significant amount of Bitcoin on its balance sheet, has seen its stock outperform Bitcoin by approximately 2x over the last 5 years.
• Fold aims to be among the top companies with Bitcoin treasuries, excluding Bitcoin miners and crypto exchanges.
• The investor presentation compares Bitcoin adoption rates to the internet's adoption, highlighting Bitcoin's faster growth.
• The document mentions that Fold's debit card offers ~2x higher rewards than the leading cash back debit card.

Management Changes

Stakeholder Impact

• Shareholders of FTAC Emerald will have the opportunity to invest in a growing bitcoin financial services company.
• Fold customers will benefit from the company's expanded resources and product offerings.
• Employees of Fold will have the opportunity to work for a publicly-listed company.
• The transaction could potentially impact suppliers and partners of Fold as the company grows.

Next Steps

• FTAC Emerald will file a registration statement on Form S-4 with the SEC, including a proxy statement/prospectus.
• FTAC Emerald will send a proxy statement/prospectus to all FTAC Emerald stockholders.
• FTAC Emerald stockholders will vote on the proposed transaction.
• The parties will seek regulatory approvals for the transaction.
• The transaction is expected to close in the fourth quarter of 2024.
• The combined company intends to remain listed on NASDAQ under a new ticker symbol to be announced at a later date.

Key Dates