Why TikTok Competitor Triller Ditched SEAC Merger for IPO

Mohit Oberoi, CFA - Author
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Jun. 15 2022, Published 10:27 a.m. ET

Triller, which competes with TikTok, was set to merge with SeaChange International (NYSE: SEAC). However, the two companies have decided to mutually call off the merger. Triller will pursue a direct listing through an IPO. Why did Triller call off the merger that would have taken it public in favor of the IPO?

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Triller and SEAC announced a merger in December 2021 and said that the merger would be completed in the first quarter of 2021.

The Triller-SEAC merger has been called off.

While Triller and SEAC merger was structured as a reverse merger, like the kind that we see in SPACs, SEAC isn't a SPAC. After the merger, SeaChange would have changed its name to “TrillerVerz Corp” and the ticker would have changed to “ILLR.” Also, SeaChange would have become a business unit of TrillerVerz and continued focusing on streaming, cable, and advertisement.

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Triller's valuation was $5 billion in the transaction.

The merger with SEAC gave Triller a valuation of $5 billion. The valuation was at a significant premium to Triller’s $1.25 billion valuation during an October 2020 funding round. The 4x jump in valuations in around a year did raise some eyebrows. However, between 2020 and 2021, we have had several examples of companies seeking a massive premium over their private market valuations.

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Why did Triller and SEAC call off the merger?

In the news release announcing the end of the merger, Triller CEO Mahi de Silva said, “The current market demands clear and disciplined thinking. After much deliberation, Triller has determined that the best course of action is a direct listing for Triller.”

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He also called the IPO a “cleaner transaction” that gives the company greater control of its destiny. He added that the IPO would be the largest creator IPO in history. The company noted that the decision was influenced by “higher-than-expected demand for its convertible debt offering and a clear preference to go public via a direct listing from its current and future shareholders.” The two companies also noted that it wasn’t possible to complete the merger before the termination date on June 30.

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Other SPAC mergers have been called off.

While the SEAC and Triller merger isn't a SPAC reverse merger in a strict sense, it has all the characteristics. We have seen several merger terminations in 2022 amid the changing macro environment. Most SPAC merger targets are loss-making companies that are badly out of favor with markets.

Even in SPACs where the mergers have gone through, the stocks have slumped after the merger. This has made SPAC stockholders more apprehensive than ever and we have seen mass redemptions.

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Triller IPO date and price

Triller expects to come up with its IPO in September. It hasn’t specified the exact date and price yet. However, looking at the bloodbath in loss-making growth stocks, of whose universe even Triller is also a part, the company would need to be circumspect about the valuations that it seeks in the listing.

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Investors have been increasingly wary of companies listing at sky-high valuations especially as high-profile IPOs like Rivian and Robinhood have crashed. Even Coinbase, which went through a direct listing in 2021, now trades at a fraction of its reference price.

Could Triller’s IPO deliver good returns for investors? We’ll have to wait and see but it will eventually depend on the prevailing market sentiments and the valuations that the company seeks.

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