According to Jase Walter, Senior Account Manager at Stone Bridge Ventures, three Canada-based crypto companies are looking to complete a merger and build Canada’s CTP (crypto asset trading platform). But now the companies are saying that they were mistaken when telling investors that the plan for a merger had the green light from Canada’s Competition Bureau.
Companies Claim Approval From the Competition Bureau
On July 10, the three companies involved in the merger, namely Coinsquare Ltd., CoinSmart Financial Inc., and WonderFi Technologies Inc, announced their plan to combine operations. While giving statements to investors and speaking to media outlets, the companies said that they’d made a deal to form a merger. They also said that the plan had been approved by the Competition Bureau, which is responsible for regulating mergers and acquisitions.
In fact, they referenced the approval by the bureau when they rang the opening bell at the Toronto Stock Exchange. This was to mark the closing of their transaction, which had been ongoing for months.
Senior Spokesperson Says Bureau Has Yet to Review Deal
But once the news was out, John Power, the senior spokesperson for the Competition Bureau, contacted media outlets to explain that they had yet to review or approve of the deal. He went on to say that the fact that the companies suggested an assent was concerning for the Bureau.
Now, it seems like the companies are backtracking and saying that they didn’t seek approval for the merger deal to begin with. The CEO of WonderFi, Dean Skurka, said that it was just a ‘miscommunication.’ WonderFi is a Vancouver-based company that will control all the businesses involved in the merger.
He also added that the confusion comes from the lack of objection by the Competition Bureau. The argument is basically this: since we didn’t get any objection that could prevent us from closing the deal, we took it as a ‘yes.’ In his words, it led to confusion in the messaging since the transaction was not of any major significance that required notifying the Bureau.
John Power Responds To WonderFi CEO
In response, John Power stated that the Bureau is unable to confirm whether this was a notifiable transaction. However, companies should generally give the Competition Bureau advance notice of a proposed transaction. This is especially if the target of the acquisition holds over $93 million worth of assets in Canada.
Similarly, they should inform the Bureau if the target of the acquisition has generated revenue worth $93 million in Canada. And if the combined Canada-based assets or revenues of the companies and their affiliates based in Canada are worth over $400 million, the bureau must be notified.
When announcing the deal, the companies said that the merger would bring together almost $600 million in combined assets. This is derived from a customer base of almost 1.65 million users, 1.6 million of which are in Canada.
While there’s no news of whether the Bureau will take action against WonderFi, Jase Walter of Stone Bridge Ventures expects the company to face obstacles. That’s because the Bureau has the right to review any M&A, regardless of size, to evaluate whether it would result in limiting competition.