SpectralMD (LON: SMD) shares are up 78% in London this morning. This is off the back of an announcement to merge with - do a Spac deal with - Rosecliff Acquisitions (NASDAQ: RCLF) on the NASDAQ market. We'll really only find out the value of the deal when we see how many of the Rose Hill shareholders also think it's a good deal and that won't be for some time yet. Sure, the whole point of having such an acquisitions company with a NASDAQ quote is to do a merger deal. But Rose Hill shareholders still have one last decision point, they can ask for their $10 back if they desire.
SpectralMD ticks all the right boxes for a potentially go-go stock. As SMD says: “Spectral MD Holdings, Ltd., an FDA Breakthrough Designated company focused on Artificial Intelligence driven Medical Diagnostic Solutions,” which does sound terribly exciting. But there is an importance there, that FDA designation makes it faster - not easier, but faster - to gain authorisation to market whatever they come up with. And AI really is going to have significant effects and drug and medical treatment research is one of the obvious areas where it will.
SpectralMD share price from London Stock Exchange
The place to check and see what the Americans think of this is by looking at RCLF.
As to why do this, drug development companies tend to be higher rated on NASDAQ than they are in London. Investors are just more used to the particularities of the sector. Well, that's one reason anyway - the other is to gain access to capital. A Spac like Rosecliff is simply a listing with some money inside it. When it merges with a real world business then that capital becomes available to the business merger.
However, the original shareholders of the Spac, the people who funded it, they have one more option point in all of this. As the merger with SpectralMD goes through they can ask for their $10 back. There's always someone, too. But this can be significant too - Buzzfeed, famously, found vast numbers of people fleeing for the door. So, while this is a done deal there's no real certainty about the price as yet - that depends upon the reaction of the shareholders in Rosecliff.