Crane Harbor Acquisition, Xanadu Quantum enter business combination agreement

Xanadu Quantum Technologies and Crane Harbor Acquisition (CHAC) entered into a definitive business combination agreement with a newly formed entity, that is expected to result in Xanadu being the first and only publicly traded pure play photonic quantum computing company. Upon closing of the transaction, shares of the combined company are expected to trade on the Nasdaq Stock Market and on the Toronto Stock Exchange. The companies said, “In 2022, Xanadu became the first pure play quantum company to demonstrate quantum supremacy with its 216-qubit Borealis system. Borealis, which was the first quantum supremacy computer made available on the cloud, demonstrated the ability to solve a complex challenge in 2 minutes that would have taken the world’s fastest supercomputer at the time 7 million years to solve. Now, with its most recent Aurora system, Xanadu has produced the first networked, modular, and scalable quantum computer. Aurora marked the first demonstration of a real-time error correction decoding algorithm with photonics…Xanadu also offers its open-source software, PennyLane, which is the most implemented quantum programming platform in the world, in use by up to 47% of quantum programmers. PennyLane is fully integrated across the hardware of all major quantum computer providers in the industry, regardless of modality.” The transaction values Xanadu at a pre-money rollover equity value of $3B and the combined company at a pro forma enterprise value of approximately $3.1B, with a pro forma market capitalization of $3.6B. The combined company is expected to receive approximately $225M from Crane Harbor’s trust account, assuming no redemptions by Crane Harbor’s public stockholders, as well as $275M in gross proceeds from a group of strategic and institutional investors participating in the transaction via a common equity committed private placement investment to purchase shares of the combined company at $10.00 per share. Over 90% of the capital committed in the PIPE financing was sourced from new investors who were not existing Xanadu shareholders. The net proceeds from this transaction will be used to accelerate the development and deployment of Xanadu’s photonic quantum computer systems to fully fault-tolerant, with subsequent commercial traction via both run time sales and PennyLane software monetization. Existing Xanadu shareholders and management will not receive any cash proceeds as part of the transaction and will roll over 100% of their Xanadu shares into shares in the combined company. Management and existing shareholders of Xanadu will be subject to lock-up agreements restricting the sale or transfer of their shares for a period of time upon closing. The transaction has been unanimously approved by the Board of Directors of Crane Harbor, as well as the Board of Directors of Xanadu, and is subject to the satisfaction of customary closing conditions, including the approval of the shareholders of each of Xanadu and Crane Harbor and the listing of the shares of the combined company on the Toronto Stock Exchange and Nasdaq, which is subject to stock exchange approval.