USA Rare Earth is Going Public – Liquidity event for Ticker Tape

USA Rare Earth SPAC Merger

USA Rare Earth SPAC Deal Explained

Ticker Tape Investments is excited to announce that USA Rare Earth, one of our portfolio companies, is set to become a publicly traded company through a merger with Inflection Point Acquisition Corp. II (IPXX), a Special Purpose Acquisition Company (SPAC). This strategic move is anticipated to finalize in the next couple months, valuing USA Rare Earth at a pro-forma enterprise value of $870 million.

Understanding SPACs: A Modern Path to Public Markets

A SPAC, or Special Purpose Acquisition Company, is a publicly listed entity created solely to merge with or acquire a private company, thereby facilitating its transition to a public company without the traditional Initial Public Offering (IPO) process. Here’s a breakdown of how SPACs operate:

  1. Formation and IPO: Sponsors establish a SPAC and raise capital through an IPO, offering shares to the public. Notably, the SPAC has no business operations at this stage; its value lies in the funds raised and the expertise of its management team.
  2. Trust Account: The capital raised is placed into a trust account, safeguarding investors’ funds until a suitable acquisition target is identified.
  3. Target Search: The SPAC’s management team typically has 18-24 months to identify and negotiate a merger with a private company. If no suitable target is found within this timeframe, the SPAC is liquidated, and the funds are returned to investors.
  4. Merger (De-SPAC Transaction): Upon identifying a target, the SPAC and the private company negotiate terms and announce the proposed merger. Shareholders of the SPAC vote to approve the transaction. Once approved, the merger is completed, and the private company becomes publicly traded.

The USA Rare Earth and Inflection Point Acquisition Corp. II Merger

In this specific transaction, USA Rare Earth is merging with Inflection Point Acquisition Corp. II to expedite its entry into the public markets. Key details of the deal include:

  • Valuation: The merger values USA Rare Earth at a pro-forma enterprise value of $870 million.
  • Operational Goals: USA Rare Earth aims to establish a vertically integrated supply chain for rare earth magnets in the United States. The company plans to have its magnet production facility in Stillwater, Oklahoma, fully operational by the end of 2025, with an initial capacity of 1,200 tons per annum, expanding to approximately 4,800 tons per annum by 2028.
  • Market Potential: With an estimated total addressable market of $41.1 billion by 2035, USA Rare Earth is positioned to become a significant producer of rare earth magnets outside of China, serving growing demand in both commercial and defense sectors.

Implications for Investors

For current shareholders of USA Rare Earth (like TTI Metals Holdings, LLC) the merger means that your private shares are expected to convert into public shares of the newly formed company post-merger. These shares will be tradable on the stock market, providing liquidity and potential for value appreciation. There may be a “lockup period” during which prior owners cannot sell their shares.

It’s important to note that the completion of the merger is subject to customary closing conditions, including approval by Inflection Point Acquisition Corp. II’s shareholders. As with any investment, the stock price may fluctuate based on market conditions and company performance.

This merger represents a significant milestone for USA Rare Earth and aligns with Ticker Tape Investments’ commitment to identifying lucrative pre-IPO deals that provide a significant return to investors

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For more detailed information, please refer to the official announcement: USA Rare Earth to go public via SPAC deal with Inflection Point

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