What Does the SPAC IPO Rebound Mean for Cross-Border Deals?

Written By Gordon Cameron and Xenia Wong

The start of 2025 has seen an uptick in special purpose acquisition company (SPAC) initial public offering (IPO) activity in the United States as the broader market grapples with political and economic volatility and traditional IPOs remain on hold. US-listed SPACs are reemerging as an alternative route to the public markets after hitting record peaks in 2020 and 2021—and then falling precipitously. SPACs, for the uninitiated, are listed acquisition vehicles that identify target companies to acquire and fund, thus bringing a company to the public market quickly and without the usual IPO process. If past is prologue, Nasdaq- and NYSE listed SPACs will look to Canadian companies as potential targets.

The numbers so far in 2025 highlight the renewed activity in this space. SPACs have collectively raised US$4.1 billion year-to-date, with US$1 billion generated in April alone. These figures include 19 SPAC IPOs in the first quarter, bringing in US$3.1 billion, and a noticeable spike from serial SPAC sponsors, who accounted for the bulk of this capital. This momentum illustrates a persistent interest in the SPAC model despite its mixed track record over the years.

In light of the recent rise in SPAC IPO activity, we take a look at what’s driving it, the kind of companies that might be targets, and what it means for Canadian companies looking for funding and to list in the United States.

A More Mature Market

SPACs are once again attracting interest as trade tensions and tariffs escalate; however, the SPAC market in 2025 has re-emerged as a more mature and disciplined environment. Participants, particularly sponsors, are taking a more intentional approach to decision-making with an emphasis on identifying high quality targets and greater scrutiny on valuations. This shift reflects the lessons learned from the 2020-2021 SPAC cycle and increased regulatory oversight. According to Law360, most blank check IPOs in 2025 are led by management teams that have launched multiple SPAC vehicles in their careers, signaling a more strategic and reputation conscious approach to dealmaking.

De-SPAC Target Landscape

In this more cautious environment, the types of targets gaining traction today increasingly resemble companies suited for traditional IPOs rather than the highly speculative sectors of the previous SPAC boom. These companies tend to be non-capital intensive, scalable and revenue generating in sectors such as artificial intelligence, SaaS, gaming, crypto and fintech and other technology driven industries. Canada is home to many of these companies, which are supported by government funding and well-established, innovative ecosystems. Additionally, Canada’s stable regulatory environment enhances the appeal of cross-border targets for US sponsors seeking high-quality, lower-risk opportunities.

For example, in March 2025, Terrestrial Energy, based in Oakville, Ontario, announced it will become the first publicly traded molten salt nuclear reactor developer upon completing a business combination with blank-check firm HCM II Acquisition Corp. The company operates a capex-light, long-duration business model which, in its view, supports sustainable long term revenue streams. In April 2025, Twenty One Capital, a bitcoin content and media company with bitcoin exposure backed by SoftBank Group and stable coin giant Tether, announced it would pursue a business combination with Cantor Equity Partners.

Canada Cross-Border De-SPAC Transactions

In 2023 we wrote a blog about mergers between US-listed SPACs and Canadian targets, Canada Cross-Border De-SPAC Transactions: What U.S.-Listed SPACs and Canadian Companies Need to Know—highlighting the cross-border opportunities this created for Canadian companies. The de-SPAC route offers young, fast-growing Canadian companies a faster path to becoming a US public company than the traditional IPO route, with the benefit of greater market certainty, flexibility to structure deals in their favor, strategic partnerships with a quality sponsor and wider access to capital and liquidity.

The key aspects of cross border de-SPACs remain the same:

• Canadian targets need to carefully consider the structure of the transaction when becoming a US company.
• SPACs that are incorporated outside of the United States but listed on a US stock exchange may elect to redomicile in the Canadian jurisdiction of the target.
• Documentation, timing and tax considerations remain highly tailored to specific de-SPAC transactions.
• If the target’s shareholder base comprises mostly Canadians, an exchangeable share structure may particularly attractive.

Bennett Jones has advised on and successfully closed multiple cross-border de-SPAC transactions for example Rumble Inc., Borealis Foods and Hammerhead Resources—each of which have demonstrated relatively strong post-closing performance post-merger.

How Bennett Jones Can Help

Bennett Jones' cross-border transactions team has deep ties to the Canadian and US business and legal communities, and provides tailored legal advice for US and other international clients doing business in Canada. To discuss how the team can assist in de-SPAC and other cross-border transactions, please contact Gordon Cameron or Xenia Wong.

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