By Echo Wang
NEW YORK (Reuters) – Artificial intelligence startup Brand Engagement Network (BEN) has agreed to go public through a merger with a blank check acquisition company in a deal valuing the combined company at $358 million, according to people familiar with the matter.
The deal with DHC Acquisition Corp, which is expected to be announced on Thursday, will provide Brand Engagement Network with about $40 million in gross proceeds, the sources said, adding that the funds will be used mostly for product development and future acquisitions.
The deal comes as the rise of ChatGPT this year has led to a flurry of investments in AI-focused ventures and startups, even as the wider funding environment remains challenging in an uncertain economy.
Artificial intelligence and machine learning startups globally have raised about $39.4 billion so far this year, according to PitchBook.
Headquartered in Jackson, Wyoming, Brand Engagement Network is a provider of AI-powered chatbots and conversational AI technology to companies in industries like automotive, healthcare, and customer service. Brand Engagement Network’s AI offerings help companies with services, including data leakage prevention and identity verification.
DHC Acquisition Corp, a special purpose acquisition company (SPAC) which raised $309 million through its initial public offering in 2021, cut the size of its offering to $47 million earlier this year after securing an extension of its life from shareholders.
SPACs are shell companies that raise money in an initial public offering and put it in a trust for the purpose of merging with a private company and taking it public. SPACs typically have up to two years from the time they list their shares to close a merger.
Since investors are unaware of the target company ahead of the IPO, SPACs often grant them the right to redeem their initial investment as an incentive to put their money in the trust.
After the deal closes, the combined company will be named BEN and will be listed on the Nasdaq under the ticker “BNAI”, the sources said.
Cohen & Company Capital Markets was the financial adviser on the deal, the sources said.
(Reporting by Echo Wang in New York; Editing by Anirban Sen and Leslie Adler)
