Alliance Entertainment SPAC Deal Falls Flat After Post-Merger Company Draws Little Shareholder Participation

NYSE Music Acquisition Corporation
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NYSE Music Acquisition Corporation
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Photo Credit: Ken Lund / CC by 2.0

Earlier this week, Alliance Entertainment completed its merger with a special purpose acquisition company (SPAC) – while also revealing that it wouldn’t list on the NYSE after all. Now, the deal has failed to generate the initially anticipated capital.

That Alliance Entertainment wouldn’t be trading on the New York Stock Exchange came to light in an official release late last week, just before the Florida-based media retailer confirmed that it had merged with the Adara Acquisition Corp. According to this announcement message, published specifically by the NYSE American, Adara/Alliance had “failed to satisfy the requirements for initial listing following a business combination.”

Alliance touched upon the development in a release of its own, concerning the initially mentioned completion of the Adara merger, and made clear plans to pursue a NASDAQ listing.

“Concurrent with Alliance Entertainment’s OTC quotation,” the more than three-decade-old company wrote, “Adara Acquisition Corp. has been delisted from the NYSE American. Alliance Entertainment also intends to seek to list on the Nasdaq Capital Market as soon as practicable after the close of the Business Combination and subject to satisfying the conditions for initial listing.”

But as Digital Music News reported, the per-share stock quotation displayed on Alliance’s OTC profile plummeted during the first day of trading. Notwithstanding an almost four percent rebound from yesterday’s close, Alliance stock was worth even less when the market closed today, to the tune of $3.98 per share, the same profile shows.

According to Billboard, the price decline resulted from minimal participation on the part of Adara shareholders. Those who chose to carry over their stakes into the combined company possess a cumulative total of approximately 167,000 shares, the outlet relayed, of 10 million total shares.

Calculating at $10 per share for good measure, the resulting $1.67 million is insignificant when considered alongside the $480 million valuation assigned to Alliance in the leadup to the merger. The company, which reportedly achieved north of $1.4 billion in revenue during its prior fiscal year, had intended to use the SPAC merger’s capital to bankroll additional acquisitions, per higher-ups.

More broadly, the previously red-hot special purpose acquisition company space has cooled dramatically in recent months, and SPACs and/or proposed SPAC deals involving Liberty Media, SeatGeek, The Music Acquisition Corp., and Triller fell through in 2022.

But select SPAC deals – those involving Middle Eastern streaming service Anghami and Paris-headquartered streaming platform Deezer chief among them – managed to wrap before the sector’s relative collapse. Shares in each company have plummeted in the interim, though; Deezer stock (DEEZR on the Euronext Paris) finished at €2.49 per share today, compared to $2.16 per share for Anghami stock (NASDAQ: ANGH).