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Shares of Exela Technologies (NASDAQ:XELA) stock are up by more than 20% after the company announced that its European subsidiary, Exchange for Bills and Payment (XBP) Europe, will merge with special purpose acquisition company (SPAC) CF Acquisition Corp VII (NASDAQ:CFFE).

CFFE is sponsored by Cantor Fitzgerald, a financial services firm with a focus on institutional clients. Upon the closing of the transaction in the first half of 2023, the combined company will be called XBP Europe Holdings. It will trade on the Nasdaq under the ticker symbol XBP. In addition, XBP will boast an enterprise value of $220 million.

XBP operates as an integrator of payments and bills to connect buyers and suppliers across several industries. In June, the company announced that it had secured $136 million in total contract value (TCV) over the next three years. Since the beginning of the year, XBP has secured a total of $175 million in TCV. In fiscal year 2021, XBP was the largest revenue contributor to Exela's $874.2 million information technology professional services (ITPS) accounting segment.

Exela executive chairman Par Chadha added: "We are pleased to announce the merger agreement with CFFE following the Letter of Intent announced in late August. We continue to execute our strategy in some very difficult market conditions and look forward to communicating additional milestones."

XELA Stock Soars on XBP Europe SPAC Merger

Both the boards of Exela and CF Acquisition have already approved the transaction. However, shareholders of CF must approve the transaction as well, and it must go through customary closing conditions too. As a result, there is "no assurance as to whether or when a closing will occur."

The news comes after Exela announced in June that it sought to sell over $200 million of its assets. In late August, the company announced that it had signed a non-binding letter of intent to create a stand-alone publicly listed company of its Europe, Middle East, and Africa (EMEA) business. That part of the business generates annual revenue of about $200 million. At the time, the XBP European platform was valued at $220 million. That's the same enterprise value at which XBP is expected to be valued.

Meanwhile, Exela operates as a business process automation (BPA) company that operates in over 50 countries. The company employs more than 17,000 workers that help serve over 60% of the Fortune 100 companies. Furthermore, XELA trades at a market capitalization of just $30 million.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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