TradeStation Group to go public through SPAC deal

TradeStation Group Inc. will become a publicly traded company through a business combination with special purpose acquisition company Quantum FinTech Acquisition Corp.

The transaction, which values the combined company at an implied pro forma enterprise value of approximately $1.43 billion, is expected to close in the first half of 2022.

At closing, 48% of the shares held by Quantum FinTech's sponsors will convert to unvested performance-based earnout shares or be forfeited.

The deal involves a merger between a newly formed subsidiary of TradeStation and Quantum FinTech, with Quantum FinTech surviving the merger and becoming a wholly owned unit of TradeStation.

The transaction has been approved by the boards of directors of both TradeStation and Quantum FinTech, and by Monex Group Inc., TradeStation's sole shareholder.

Quantum FinTech's shareholders will receive shares in TradeStation in exchange for their Quantum FinTech shares. Each Quantum FinTech share held by the private investment in public equity, or PIPE, investors and the sponsors of Quantum FinTech will be exchanged for one common share of TradeStation. However, each holder of a Quantum FinTech public share who has elected not to redeem will receive more than one common share of TradeStation based on an exchange ratio formula supported by the issuance of an additional 750,000 TradeStation common shares.

Upon closing of the merger, each issued and outstanding Quantum FinTech warrant will become a warrant to receive the number of TradeStation common shares that the holder would have received if they had exercised such a warrant immediately before the transaction.

Assuming no redemptions of Quantum FinTech public shares, Monex will own approximately 80% of TradeStation at closing. Monex's shares in TradeStation will be subject to lockups, some up to three years, according to a news release announcing the deal.

Assuming no redemptions of any public shares of Quantum FinTech, the transaction will provide approximately $316 million of cash prior to payment of expenses, consisting of the contribution of approximately $201 million of cash held in Quantum FinTech's trust account and $115 million of additional capital through a private placement of common stock by Quantum FinTech. The PIPE includes, as co-anchor investments, $50 million from Monex and $50 million from Galaxy Digital LP, which is affiliated with Galaxy Digital Holdings Ltd.

Net proceeds from the transaction are intended to be used to help fund the company's plans to accelerate account and revenue growth through substantially increased brand awareness and performance-based marketing spend, as well as increased product development and IT head count for completion of certain new product feature initiatives, and to add liquidity to support an anticipated larger customer base.

TradeStation's management team — including John Bartleman, president, CEO and member of TradeStation's board — will continue to lead the company following completion of the transaction.

Simpson Thacher & Bartlett LLP is acting as legal adviser and BofA Securities is acting as sole financial adviser and capital markets adviser to TradeStation. Winston & Strawn LLP is acting as legal adviser and Piper Sandler & Co. is acting as financial adviser to Quantum FinTech. Piper Sandler is also acting as lead placement agent on the PIPE, and Latham & Watkins LLP is acting as placement agent counsel.