Bitcoin Shop Inc. has invested $1.5 million in Spondoolies-Tech Ltd., an Israel-based bitcoin mining company. The investment follows the announcement that BTCS and Spondoolies plan to merge. The investment marks the first step of the merger.
The two companies will create the first publicly-traded company to produce bitcoin transaction verification equipment. It will also deploy bitcoin mining resources.
BTCS purchased a 6.6 percent equity interest in Spondoolies. It receives exclusivity rights and pricing for current and future Spondoolies products as well as a $1 million breakup fee should the merger not consummate.
The investment was based on a pre-money valuation of about $21.2 million.
Based in Kiryat Gat, Israel, Spondoolies-Tech is a developer of bitcoin transaction verification servers. It began in 2013. Spondoolies has shipped thousands of servers to customers worldwide in the last year.
Upon closing the merger, the parties will equally share the dilution resulting from BTCS’ April 22, 2015 financing. Charles Allen will be the entity’s CEO and chairman. Guy Corem, Spondoolies CEO and co-founder, will serve as a board member and executive officer. Yuval Rozen will be the BTCS CFO.
The merger is subject to conditions, including satisfactory completion of diligence and execution of agreements.
Allen said the planned combination of the two companies represents a new force in the evolving block chain.
“This is a powerful merger as the technologies of the two companies are clearly very complementary and stand to produce immense revenue growth while delivering value to customers, shareholders and employees,” he said.
“We are excited to begin our partnership with BTCS and appreciate their support during a transformative part of our company’s growth,” said Corem. “We believe this new relationship will ensure our ability to continue development and production of innovative and high quality products, targeted mainly for internal use of the merged company but also to deliver the highest quality bitcoin mining for our transaction verification services.”