NEW YORK - EEW Renewables Ltd, a prominent developer of renewable energy projects, has announced a definitive business combination agreement with Compass Digital Acquisition Corp. (NASDAQ:CDAQ), a special purpose acquisition company. The transaction is set to value EEW at a pre-money enterprise value of $300 million, with a pro forma enterprise value of $386 million.
The proposed merger is expected to close in the first quarter of 2025, subject to customary closing conditions and approvals. Upon completion, the combined entity plans to list on Nasdaq, aiming to leverage the market's opportunities to accelerate EEW's growth trajectory.
EEW has developed approximately 1.5 GW of renewable energy projects since its inception in 2012 and boasts a significant project pipeline of 9 GW. The company specializes in solar PV, battery energy storage systems (BESS), and green hydrogen development. This robust pipeline is set to provide coverage of its 2024 sales forecast by approximately 8 times.
Svante Kumlin, CEO of EEW, stated that the business combination marks a significant milestone, enabling the company to continue growing and capitalizing on its project pipeline. Thomas Hennessy, CEO of CDAQ, expressed confidence in EEW's strategic vision and expansive project pipeline, which is anticipated to offer investors a compelling long-term opportunity.
Under the terms of the agreement, EEW's existing shareholders will convert their equity ownership into the combined company, expected to own approximately 79% of the post-combination entity. The transaction is expected to deliver gross cash proceeds to EEW of around $25 million through trust proceeds and additional financing.
The proposed business combination has received unanimous approval from the boards of directors of both EEW and CDAQ. Advisors include Cohen & Company Capital Markets and Roth Capital Partners as financial advisors, with legal counsel provided by Ellenoff Grossman & Schole LLP and Seward and Kissel LLP.
This announcement is based on a press release statement and contains forward-looking statements regarding the anticipated benefits and timing of the proposed business combination. Additional information will be provided in a Current Report on Form 8-K filed by CDAQ with the U.S. Securities and Exchange Commission.
InvestingPro Insights
As Compass Digital Acquisition Corp. (NASDAQ:CDAQ) prepares to merge with EEW Renewables Ltd, investors are closely examining the financial health and market position of CDAQ. According to InvestingPro data, CDAQ has a market capitalization of $84.07 million and is trading at a high earnings multiple with a P/E ratio of 122, which is adjusted to 80.45 when considering the last twelve months as of Q2 2024. This high valuation metric suggests investors have high expectations for the company's future growth.
InvestingPro Tips reveal that CDAQ is currently trading near its 52-week low, which may present a potential entry point for investors who believe in the company's long-term prospects. Furthermore, CDAQ has been profitable over the last twelve months, as indicated by a basic and diluted EPS of $0.09. However, the company does not pay a dividend, which may influence the investment decisions of income-focused shareholders.
Another point of consideration for investors is CDAQ's liquidity position. Short-term obligations exceed liquid assets, which could pose challenges in the near term, especially as the company navigates the merger process. On the bright side, the company's return on assets stands at 0.97% for the last twelve months as of Q2 2024, which may indicate efficient use of its asset base.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available on InvestingPro's dedicated page for CDAQ (https://www.investing.com/pro/CDAQ), providing deeper insights into the company's financials and market potential.
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