Nasdaq plans blank-check company listing standards
By Jonathan Stempel
NEW YORK (Reuters) - Nasdaq Stock Market Inc <NDAQ.O> said on Thursday it will propose standards for listing "blank-check" companies, an increasingly popular vehicle formed solely to acquire other businesses.
The move is an attempt to capture more listings from the companies, which now primarily list on the American Stock Exchange. Nasdaq's main competitor for listing IPOs is NYSE Euronext <NYX.PA><NYX.N>, which agreed last month to buy Amex.
Blank-check companies raised more than $12 billion last year in more than 60 initial public offerings, up from $2.6 billion in 2006, research firm Dealogic said. The companies are also known as special-purpose acquisition vehicles, and raised about one-fourth of all U.S. IPO proceeds in 2007.
Nasdaq plans to ask the U.S. Securities and Exchange Commission for a rule change to allow it to list blank-check companies, and subject them to additional requirements developed specifically for them.
"It's a market share issue," said Jay Ritter, a finance professor at the University of Florida in Gainesville. "SPACs have made blank-check offerings respectable, with safeguards that weren't present before. Nasdaq is trying to respond, while putting in safeguards for investors."
The Nasdaq said blank-check companies seeking listings would need to create an escrow account for IPO proceeds, and spend at least 80 percent of this amount in cash on acquisitions within three years of going public.
In addition, so long as they are in the acquisition stage, the companies must have each purchase approved by both its shareholders and a majority of its independent directors, Nasdaq said.
"Acquisition vehicles are an increasingly common capital-raising device," Bob McCooey, a Nasdaq senior vice president, said in a statement. "We believe that listing them on Nasdaq, subject to these important investor protections, will benefit investors and issuers."
Neither NYSE Euronext nor the SEC was immediately available for comment.
(Additional reporting by Karey Wutkowski and Lilla Zuill; Editing by Tim Dobbyn and Derek Caney)