Seedrs and Crowdcube have terminated their £140m planned merger following the announcement from the Competition and Markets Authority (CMA) that it is set to block the deal.
Seedrs has also announced a new funding round, with further details to be announced in due course.
The equity crowdfunding platforms unveiled plans to merge last October, subject to regulatory approval, then the CMA fast-tracked its inquiry into the proposed merger in November.
Seedrs and Crowdcube have agreed to terminate the planned merger after expressing disappointment at the CMA’s provisional findings and announcement.
Read more: Seedrs and Crowdcube: A P2P history
“Following on our message about the CMA’s provisional findings yesterday, I wanted to share with you that we have agreed to terminate our merger with Crowdcube,” said Jeff Kelisky, chief executive of Seedrs and Jeff Lynn, co-founder and executive chairman of Seedrs, in an email to investors.
“We fervently disagree with the CMA’s view, but given the low likelihood that they will change their mind at this point, we have concluded that it does not make sense to continue the battle.
“However, we had prepared for this possibility, and we’re pleased to announce that we have agreed a new funding round for the business. Given the strength of the business’s recent performance, we will be able to use this round to return to our pursuit of major growth initiatives. We will share full details of the round very shortly.
“Thank you again for all of your support for Seedrs, and here’s to our great opportunities ahead!”
“We have jointly agreed with Seedrs, in line with the terms of the proposed acquisition, that both parties are withdrawing from the transaction following the CMA’s findings,” a statement from Crowdcube said.
“We’re obviously disappointed with the CMA’s decision, however, Crowdcube recorded outstanding levels of growth in the last 12 months and remains in a very strong financial position following record revenue in 2020 and two consecutive quarters of profitability.
“We continue to invest in our people and products and we expect to be profitable again in the first half of 2021 with an unprecedented level of high profile European businesses set to fundraise with us in the coming weeks.”
Earlier this year Seedrs and Crowdcube warned that their platforms could be forced to close and businesses would lose a route to funding if the planned merger was blocked. The CMA said it carefully considered the firms’ arguments as part of its investigation.