This analysis was first published in SvD Näringsliv, in Swedish, on April 19th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
When Bure’s SPAC vehicle ACQ wants to take security company Yubico public, it raises many questions. The main one: why are the buyers and sellers largely the same people from the same firms?
At Wednesday morning’s press conference, Patrik Tigerschiöld, chairman of ACQ Bure, posed the question that every ACQ shareholder ought to be asking.
“And then perhaps you ask yourself — ACQ has been looking for a company to acquire for two years, and ends up buying a company that Bure already owns a stake in. This fact has been a challenge for me and the entire team.”
Yes, that does sound like a challenge. A communications challenge in particular. How do you spend two years searching for something your own parent company already had in its portfolio?
No such explanation was forthcoming, unfortunately. And it leaves a long list of questions unanswered in the wake of today’s announcement about security company Yubico — founded by Stina Ehrensvärd — which may soon be listed on Sweden’s Nasdaq First North Growth Market.
Investing in a SPAC is a kind of bet more than anything else. The idea is that the SPAC’s management will scour the market for strong listing candidates, evaluate them, and ultimately execute a merger that results in a fast and efficient public debut for a promising company. That’s how it’s meant to work in theory.
In practice, it’s worth noting that there was a considerably cheaper and faster way to get Yubico to market. To understand why, you only need to look at the names on each side of the deal.
Among Yubico’s largest sellers: Bure (via Bure Growth), AMF Tjänstepension, and AMF Fonder.
Among ACQ Growth’s largest owners: Bure, AMF Tjänstepension, and AMF Fonder.
The conflict of interest is obvious, and it has led several board members to recuse themselves from the decisions. Valuation is another problem. How do you price a company when the buyer and seller are largely the same people?
The proposed structure solves a headache for ACQ Bure, whose SPAC format has completely fallen out of favor with investors. In 2021, 791 new SPAC vehicles were created worldwide. In February this year, that number was 10. The SPAC concept is currently dead.
But for SPACs that are already listed, the obligation remains: find a merger partner or return the money to investors. ACQ Bure had until March 2024 to find a suitable company. That problem is now solved.
Even for technically listed SPAC companies, the current market backdrop can’t be ignored. Over the past year, the tech-heavy American Bessemer Cloud Index has fallen 24 percent. In Sweden there are many examples of tech companies down far more — sometimes over 80 percent.
When SvD asked management directly about the tech market environment, they acknowledged it had been poor both last year and this year. But according to Bure CEO Henrik Blomkvist, Yubico is something “special and unique.”
There is indeed something unique about this deal. But it isn’t only the impressive technology that Swedish-American Yubico has developed over its 16 years as a company, or the fact that it has helped set the global standard for cybersecurity — an impressive achievement by any measure.
What may be rather more unique and special here is how majority owners Bure and AMF have handled their responsibilities toward other shareholders and pension savers. It took them two years and significant costs to identify a company they already owned — in order to then list it in the toughest tech market since 2008. That does sound uniquely special, in its own way.
Note: Yubico is one of the nominees for SvD Affärsbragd 2023.
