MDH Acquisition Corp. (NYSE:MDH) has mutually terminated its combination agreement with digital auto insurance provider Olive.com.
The press release did not include a reasoning for the breakup, but like many deals in the first half of 2022, the general malaise in the current market was the likely culprit. MDH aims to continue to seek out a target and has most of a year to do so with its transaction deadline coming up in February 2023.
It has been a theme of SPAC deal adjustments of the past few months that the path to completion in this environment may require either additional financing or a re-strike of the deal. Given that the market conditions and universe of comparable companies have changed radically in some cases since last fall, one might have expected more re-struck deals. In Olive.com’s case, its closest public comps Lemonade (NYSE:LMND) and de-SPACs Hippo (NYSE:HIPO) and Metromile (NASDAQ:MILE) have all fallen between -69% and -80% since this deal was announced on July 22.
But, as this and other terminations may indicate, teams have found it easier to tack on new financing rather than to re-open the valuation question and when they do the latter a full parting of ways can occur. Nonetheless, with other options available, packing one’s bags and saying farewell can be the best thing for both sides in this market.
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