Galaxy Digital postpones the acquisition of BitGo until later in 2022

The transaction is intended to occur concurrently with Galaxy’s domestication in Delaware, which is scheduled to occur between Q2 and Q4 of 2022.

Galaxy Digital, a cryptocurrency investment firm, was unable to complete the acquisition of digital asset custodian BitGo in the first quarter of 2022 as scheduled.

Galaxy Digital has modified the conditions of its acquisition of BitGo, CEO Mike Novogratz stated on Thursday during an earnings call.

“We’ve altered the deal slightly to reflect BitGo’s growth,” Novogratz said, noting that BitGo had added approximately 150 employees since the company signed the pact in May last year.

He stated that Galaxy remains dedicated to “integrating BitGo and establishing an institutional cryptocurrency platform,” and the firms will continue to collaborate on integration.

Galaxy Digital and BitGo have renegotiated the acquisition to occur “immediately following” Galaxy Digital’s domestication as a Delaware corporation, according to an official announcement. Domestication is scheduled to take effect between Q2 and Q4 of 2022 and is subject to approval by the US Securities and Exchange Commission, the firm added.

Galaxy agrees to pay a hefty charge if the transaction is not completed by the end of 2022, the announcement reads.

“Galaxy Digital will pay BitGo a $100 million reverse termination fee in certain situations if the transaction is not completed by December 31, 2022, subject to certain limitations.”

Galaxy intended to complete the BitGo acquisition by the end of Q1 2022, paying 33.8 million newly issued Galaxy shares, or $1.2 billion, in addition to an extra $265 million in cash.

According to Galaxy Digital’s March 30 closing price, the new acquisition conditions include 44.8 million freshly issued shares and $265 million in cash, reflecting an overall transaction value of about $1,158 million.

Galaxy also expected to go public in the United States in the first three months of 2022, concurrent with the BitGo acquisition. In August 2018, the company debuted its first-ever listing on Toronto’s TSX Venture Exchange.

Galaxy shares have fallen precipitously since the company announced the BitGo purchase, falling from above $30 in January 2022 to below $12. The stock is currently trading at $17, down 14% in the last 24 hours, according to TradingView data.

Galaxy also announced a 55 percent growth in net comprehensive income from about $336 million in Q3 2021 to $521 million in Q4 2021. Simultaneously, the firm expects net comprehensive income to be a loss of $110 million to $130 million, bringing the total to around $2.45 billion.

The corporation has a history of suffering huge losses in recent years. Galaxy lost roughly $176 million in the second quarter of 2021, although Novogratz stated that the company remained “substantially profitable” in the first half of 2021, with net comprehensive income totaling $684 million.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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