Singapore's Grab Holdings postponed the expected completion of its merger with a United States blank-cheque company as the ride-hailing and food-delivery giant works on a financial audit of the past three years.
The deal, set to be one of the largest mergers with a blank-cheque company, is now expected to be completed in the fourth quarter of this year, the company said in a statement on Wednesday.
When announcing the merger in April, Grab expected completion in the third quarter.
Grab is the latest company to be affected by intensifying scrutiny from US financial regulators on deals involving special purpose acquisition vehicles. A special purpose acquisition company (Spac) listing boom has pushed the number of pre-deal blank-cheque companies trading on US exchanges to more than 500.
"It's not completely surprising to see a delay," said Mr Matthew Kanterman, an analyst with Bloomberg Intelligence. "The audit process can take several quarters, especially if there needs to be back and forth with the SEC over certain accounting decisions and policies."
Grab said it is in the process of finalising its financial audit in accordance with Public Company Accounting Oversight Board (PCAOB) standards, as required by the US Securities and Exchange Commission (SEC).
It is working with the SEC to get pre-clearance of certain accounting policies and related financial disclosures. As a result, its financial information for the past three years remains subject to review and revision, it said.
Last week, the SEC announced the removal of PCAOB chairman William Duhnke, replacing him on an interim basis with PCAOB board member Duane DesParte. SEC chairman Gary Gensler said he looks forward to working with Mr DesParte and the staff of PCAOB to "set it on a path to better protect investors by ensuring that public company audits are informative, accurate and independent".
The SEC's crackdown on how accounting rules apply to a key element of blank-cheque companies has prompted restatement filings in recent months. The regulator has said that Spacs may need to account for warrants - securities issued to early Spac investors - as liabilities rather than as equity.
Grab, South-east Asia's most valuable start-up, is trying to take advantage of the US-led Spac listing craze even as its business continues to be affected by the coronavirus outbreak.
Consolidated gross merchandise value rose 5.2 per cent to US$3.6 billion (S$4.8 billion) in the first quarter, with 49 per cent growth in food delivery helping to offset a decline in ride hailing, Grab said. The financial services segment expanded 17 per cent. The company did not provide revenue or profit numbers.
Grab said in April that it is set to have a market value of about US$40 billion after the combination with Altimeter Growth, the Spac of Mr Brad Gerstner's Altimeter Capital Management. The combined entity's stock will trade on the Nasdaq under the ticker GRAB after the completion of the deal.
The company appointed Mr Christopher Betts as general counsel. He was previously a partner in the Hong Kong office of Skadden, Arps, Slate, Meagher & Flom, a New York-based law firm.