Seedrs has announced the termination of its merger with Crowdcube after the competition regulator provisionally blocked the deal on Wednesday.
Crowdcube agreed to buy Seedrs last October in a deal before the Competition and Markets Authority (CMA) said that the tie-up would result in a substantial lessening of competition.
Yesterday the regulator said its provisional findings found blocking the merger, which would see the combined company take at least 90 per cent share of the market, “may be the only way of addressing competition concerns”.
“The decision to block any deal is not taken lightly and is only made if there is a real risk of customers losing out,” Kirstin Baker, chair of the CMA inquiry group said.
Seedrs said it was “deeply disappointed” in the CMA’s decision and argued the merger would have a “highly positive outcome” for British small businesses.
In a statement this morning Seedrs said: “Following on our message about the CMA’s provisional findings yesterday, I wanted to share with you that we have agreed to terminate our merger with Crowdcube.”
“We fervently disagree with the CMA’s view, but given the low likelihood that they will change their mind at this point, we have concluded that it does not make sense to continue the battle.”
Seedrs executive chairman and co-founder Jeff Lynn said the company had agreed a new funding round but did not provide any further details.
“Given the strength of the business’s recent performance, we will be able to use this round to return to our pursuit of major growth initiatives. We will share full details of the round very shortly,” he added.
Crowdcube said: “We’re obviously disappointed with the CMA’s decision, however, Crowdcube recorded outstanding levels of growth in the last 12 months and remains in a very strong financial position following record revenue in 2020 and two consecutive quarters of profitability.”