Twenty One Capital (XXI) Stock Rallies on Tether’s Proposed Three-Company Merger Plan

Key Takeaways

• Tether has put forward a proposal to combine Twenty One Capital (XXI), Strike, and Elektron Energy
• Shares of XXI rose more than 6% during after-hours trading on the news
• The merger would create a comprehensive Bitcoin platform encompassing treasury holdings, mining operations, and financial services
• Jack Mallers is expected to take an executive position, while Elektron’s Raphael Zagury has been proposed for the president role
• Financial details and completion timeline remain undisclosed

Shares of Twenty One Capital (XXI) surged over 6% during after-hours trading Wednesday following an announcement from majority stakeholder Tether Investments regarding a proposed three-company merger involving Bitcoin payment processor Strike and mining operation Elektron Energy.

Twenty One Capital Inc, XXI

The equity had ended the standard trading day down 1.7% at $7.83 but rallied to an after-hours peak of $9.28 before stabilizing around $8.35.

Tether announced its intention to cast its XXI ownership votes in support of both proposed transactions. The initial deal would unite XXI with Strike, while the subsequent agreement would incorporate Elektron Energy, establishing a single publicly traded Bitcoin-focused enterprise.

XXI has faced headwinds throughout the current year. Shares have declined more than 10.5% since January, mirroring the broader downturn in Bitcoin valuations.

The firm presently maintains a position of 43,514 BTC, positioning it as the second-largest corporate Bitcoin holder. Only Strategy, Inc., with its 818,334 BTC holdings, maintains a larger position.

Contributions from Each Entity

Strike would bring what Tether characterized as a profitable financial services infrastructure, complemented by worldwide distribution channels and regulatory compliance frameworks.

Elektron Energy would introduce industrial-scale Bitcoin mining capabilities. The company controls approximately 5% of the Bitcoin network’s aggregate computing capacity, with total production expenses reportedly under $60,000 per Bitcoin.

Combined, the transaction would consolidate Bitcoin treasury management, mining activities, financial services, lending operations, and capital markets functions within a single public entity.

Proposed Executive Team

Tether has recommended Elektron’s founder and chief executive Raphael Zagury for the president position of the unified organization.

Jack Mallers, who serves as both Strike’s founder and CEO as well as co-founder and CEO of XXI, would assume an executive capacity within the consolidated firm.

Tether characterized this arrangement as merging “Mallers’ product innovation, brand recognition, and consumer Bitcoin expertise with Zagury’s capital markets knowledge, operational prowess, and execution capabilities.”

Additional leadership details were not disclosed.

XXI entered public markets last December via a SPAC transaction with Cantor Equity Partners. The company launched with backing from Tether, Bitfinex, and Mallers, pursuing a strategy focused on capital-efficient Bitcoin acquisition.

Should these mergers proceed as outlined, that founding mission would significantly expand beyond merely accumulating Bitcoin as a balance sheet asset.

Tether has not revealed financial terms or an expected completion schedule for either deal.

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