Years after postponing and then withdrawing plans for an initial public offering, GCT Semiconductor Inc. is again planning to go public — this time through a merger with a blank-check company.
The San Jose company announced Friday it's reached an agreement to go public in a combination with Concord Acquisition Corp. III. GCT and the New York-based special-purpose acquisition company said the deal would provide GCT with as much as $87 million in capital, before merger-related expenses, and peg its value at as much as $661 million.
"We believe that this transaction will strengthen GCT's business operations and provide the funding needed to fuel our ... product development and commercialization," GCT CEO John Schlaefer said in the news release announcing the deal.
Concord III and GCT representatives did not immediately respond to requests for comment.
GCT designs and manufactures wireless networking chips for Internet of Things and other devices that help them connect to 4G LTE and 5G networks. The company has partnerships with LG Electronics Inc., NEC Corp. and Alpha Networks Inc., among others, according to its website.
In filings with the Securities and Exchange Commission describing their deal, Concord III and GCT didn't release any of the latter's financial results or offer any projections of its future revenue or profit.
The chip designer plans to use the money from the transaction to fund its development of 5G chips and expand into new markets. The companies expect the deal to close in the first quarter and plan to list shares of the combined company on the New York Stock Exchange under the ticker GCTS. The merger is subject to the approval of shareholders of both GCT and Concord III.
This isn’t the first time GCT has attempted to go public.
The chip designer in 2011 filed its to raise as much as $100 million in an IPO. Early the next year, it scaled back the offering, indicating it planned to raise less than $70 million.
Instead it postponed the offering. Two years later, it withdrew its IPO plans, blaming "current market conditions." At the time, relatively few technology companies were successfully completing such offerings.
Concord III is facing a deadline
To date, GCT has raised $275.99 million and was last valued by investors in 2015 at $186.64 million, according to PitchBook Data. Its backers include LG, DNX Ventures, Docomo Innovations, East Gate Capital Management and SDL Ventures.
The planned merger of GCT and Concord III comes as the latter is running out of time to complete a combination.
Concord III (NYSE: CNDB) raised $345 million in a November 2021 IPO, initially planning to use the money to attempt to merge with a company in the financial services or financial technology sector. Like all SPACs, Concord III had a deadline to complete a deal — initially May 8 of this year. On May 4, though, its shareholders voted to extend the deadline until Nov. 8.
With time running out on that new deadline, the SPAC is again asking shareholders for an extension, this time until next August. Its investors are slated to vote on that proposal Tuesday.
One of the unique features of SPACs is that shareholders can trade in their shares for the price originally paid for the stock — usually around $10 a piece — either when voting on a merger or an extension of a merger deadline. Many of Concord III's shareholders took advantage of that provision in May, trading in 30.5 million shares for refunds.
As a result, the SPAC had to give back $317.4 million of the cash it had raised in its IPO, leaving it with just $42 million to give directly to GCT. The other $45 million the chip maker will get out of the merger will come from a private placement investment timed with the merger.
Concord III went public toward the tail-end of the SPAC craze that saw hundreds of such companies formed and dozens of them take startups public in mergers. SPACs lost much of their appeal after many of the companies that went public in such combinations saw their values plunge and regulators threatened to crack down on such deals. Some have also gone out of business.
Last month, Bloomberg reported that Velo3D Inc., a Campbell-based 3D printing service provider that went public via a blank-check company in 2021, was exploring a potential sale of its business and other "strategic options."
