01—Abstract
Summary
Summary of the 8-K filed January 11, 2021. Cited figures are marked; the original filing is the authoritative source.
Intercontinental Exchange, Inc. (ICE) announced on January 11, 2021, that its majority-owned subsidiary, Bakkt Holdings, LLC, has entered into a merger agreement with VPC Impact Acquisition Holdings (VIH), a special purpose acquisition company (SPAC).
This transaction will result in Bakkt becoming a publicly listed company on the New York Stock Exchange under the name Bakkt Holdings, Inc. The transaction will be structured as an "Up-C" where Bakkt will hold the operating assets, and the public company will hold membership interests in Bakkt. This strategic move signifies a significant step towards unlocking value for Bakkt and potentially provides ICE with a more liquid investment in the digital asset ecosystem.
Investors should note that upon the closing of the merger, ICE expects to reclassify Bakkt as an equity method investment, meaning Bakkt will no longer be consolidated into ICE's financial statements. Additionally, a PIPE investment of $325 milliona, including a $50 million commitment from ICEH, a subsidiary of ICE, will occur concurrently, strengthening Bakkt's balance sheet prior to its public debut.
02—Key points
Key Highlights
- Bakkt Holdings, LLC, a majority-owned subsidiary of ICE, will merge with a SPAC (VPC Impact Acquisition Holdings) to become a publicly listed company.
- The combined entity will be renamed Bakkt Holdings, Inc. and is expected to list on the New York Stock Exchange.
- The transaction involves an 'Up-C' structure, where Bakkt will house the operational assets.
- ICE anticipates reclassifying Bakkt as an equity method investment post-merger, leading to deconsolidation from ICE's financial statements.
- A Private Investment in Public Equity (PIPE) of $325 million is planned, with ICEH (a subsidiary of ICE) contributing up to $50 million.
- ICEH has entered into a support agreement to vote in favor of the merger and related transactions.
03—Questions
Frequently Asked Questions
What is the primary outcome of this announcement for ICE?
The primary outcome is that ICE's majority-owned subsidiary, Bakkt, will become a publicly traded company through a merger with a SPAC. This is a significant step in unlocking Bakkt's value and potentially provides ICE with a more liquid stake in the business.
How will this transaction affect ICE's financial statements?
Upon the closing of the merger, ICE expects to reclassify Bakkt as an equity method investment. This means Bakkt will no longer be consolidated into ICE's financial statements, which could impact reported revenues and assets for ICE going forward.
What is the significance of the 'Up-C' structure?
The 'Up-C' structure is a tax-efficient way to organize the company. In this case, Bakkt and its subsidiaries will hold the core operating assets, and the publicly traded entity (Bakkt Pubco) will primarily hold membership interests in Bakkt. This structure can offer benefits for both the ongoing owners of Bakkt and public shareholders.
What is the PIPE investment and what is ICE's involvement?
The PIPE (Private Investment in Public Equity) investment is a $325 million infusion of capital from various investors into Bakkt Pubco concurrently with the merger. ICEH, a direct subsidiary of ICE, is participating in this PIPE, committing up to $50 million to further capitalize Bakkt Pubco.
04—Continue