Golden Rock Global (LON: GCG) is a tiny, tiny, quotation and what it's about to do is of no great interest. Sure, the shares are up 14% on the back of their announcement. But the announcement isn't all that interesting - it's the implication of it that is.
That announcement: “We are not aware of any reason for the recent rise in the share price but would like to confirm that the Company is in early stage discussions with a number of parties regarding potential acquisitions. Any acquisition, if completed, would constitute a Reverse Takeover.
We feel that the Company's current share price is undervalued and would be looking to conclude any acquisition at a valuation that would represent fairer value to shareholders.”
OK, that second part there is pretty much rote - it would be odd if directors said a company wasn't worth more than the current share price.
So, what they're saying is that Golden Rock is simply a shell company. It exists, there's a quotation and that's about it. The only real value is if someone wants to come to market without having to do an IPO. Then they could merge with the quoted shell and do it that way. There are a number of people at least vaguely interested in doing this too. OK. There are also investors who think that someone doing this would add value to Golden Rock as well - that's why they're bidding up the shares. OK.
Golden Rock Global share price from London Stock Exchange
All fine in fact. Except that quoted shells are what we used before SPACs. Or even, SPACs are a more modern development of quoted shells. And we are allowed to have SPACs in London now. So, logically, SPACs should have displaced the value in quoted shell companies.
The big difference being that a quoted shell still brings with it all those legal liabilities from any and all past activities. A SPAC is a clean and new shell. Given modern lawyering there's a significant value to that.
But here we've got value being ascribed to a quoted shell - a rising value in fact. Which, logically, must mean that SPACs are becoming less valuable. Which is an interesting thought. If people are willing to use a cash shell instead of a SPAC then shouldn;t we therefore place less value on the quoted SPACs that are lying around?
