8i Acquisition 2 (NASDAQ:LAX) announced this afternoon that it has amended its Share Purchase Agreement in connection to its business combination with digital health firm EUDA to reduce its consideration payable, and limit the available earn-out payment.
Due to the global stock market’s recent decline and EUDA’s revised conservative financial projections, the parties have agreed to slash the enterprise value from $583 million to just $172 million. LAX will now issue 14 million new ordinary shares for 100% of EUDA Health and an earn out of up to 4 million LAX ordinary shares before December 31, 2024.
As background, LAX entered into a share purchase agreement at deal announcement back in April 2022 with EUDA Health, Watermark Developments Limited, a British Virgin Islands business company, and Kwong Yeow Liew. At that time, the deal was struct at $583 million enterprise value and was something of an in-house deal as 8i 2 CEO and Chairman James Meng Dong Tan owns a 10% stake in Watermark Developments Limited, which is itself the sole shareholder of EUDA. Watermark is rolling 100% of its equity into the combined company and is expected to own 82% post-close.
The amended Share Purchase Agreement will be adjusted from $550 million to $140 million to be paid at closing by LAX to Watermark Developments Limited. The initial consideration will be payable in ordinary shares of LAX, valued at $10.00 per share.
EUDA Health also noted in today’s press release that it recently revised its financial projections for 2022 to 2026, and provided an updated slide in its investor presentation. The revision will account for delays caused by the COVID-19 restrictions in overseas markets, such as Indonesia and India, where the digital health firm plans to expand. Additionally, the revised projections set Singapore as the core market in determining the valuation of EUDA Health, and its regional expansion plan was excluded even though EUDA Health is actively continuing its expansion in Indonesia and India.
LAX’s CEO James Meng Dong Tan believes the reduced purchase price will give shareholders the added benefit of lesser dilution as a result of the transaction. Singapore-based EUDA provides AI-powered telehealth services through an app to patients across Southeast Asia.