Cantor Equity Partners: Waiting On Merger With Twenty One Capital

Summary Cantor Equity Partners is merging with Twenty One Holdings to create a bitcoin-focused entity, measuring performance in bitcoin terms. Twenty One will introduce Bitcoin Per Share (BPS) and Bitcoin Return Rate (BRR) as new performance metrics for shareholders. Current share conversion ratios for Cantor Equity Partners are examined to determine if Cantor Equity Partners represents an opportunity. Cantor Equity Partners( CEP ) announced a reverse merger on April 22, 2025 which will merge into a new entity, Twenty One Capital, Inc.. Cantor Equity Partners was incorporated in 2020 under a different name and in June 2024, the company changed its name and prepared for its IPO in August 2024. Currently, if an investor wants to invest before the merger becomes official, they must purchase Cantor Equity Partners’ shares. The purpose of this article will be to examine shares of Cantor Equity Partners to determine the opportunity at hand, in the case that the merger is completed. Investors Several interesting parties have come together to spearhead this merger. This impressive list of investors will be major voices in determining the direction of the company. Bitfinex Bitfinex is a cryptocurrency exchange headquartered in the British Virgin Islands and is contributing 7,000 bitcoin to the merger. Given their expertise in bitcoin exchange operations, they could be a valuable partner to the company. Bitfinex will be one of the largest shareholders along with those mentioned below. Softbank Group Softbank, headquartered in Tokyo, Japan, is a major investor in the new company and is contributing approximately $900 million in capital. They are projected to hold 26.1% of shares when the merger is completed. Tether Tether, the largest USD stablecoin issuer, will be the majority shareholder in the company. There is gray area surrounding how much ownership will be given to these major shareholders but Tether is expected to hold nearly 50 percent of the equity and greater than 50 percent of the voting power. The following table shows a breakdown of what ownership will look like before and after the conversion of some convertible notes offered in the deal. This graphic was sourced from an article on Coindesk describing the merger. Pre and Post Convert Twenty One Shares (Twenty One Capital Presentation ) Management & Friends CEO Jack Mallers Well-known bitcoin investor and entrepreneur Jack Mallers will lead the company while also leading his current company, Strike. Strike is a bitcoin company that offers various bitcoin related services. Here is a statement from Jack Mallers on what he hopes Twenty One Capital will become. We believe that Bitcoin is the answer, and Twenty One is how we bring that answer to public markets. Our mission is simple: to become the most successful company in Bitcoin, the most valuable financial opportunity of our time. We’re not here to beat the market, we’re here to build a new one. A public stock, built by Bitcoiners, for Bitcoiners. Friends in High Places Howard Lutnick formerly served as the CEO of Cantor Fitzgerald where he reportedly invested over $1 billion into Strategy, the original bitcoin treasury company. This was prior to Lutnick stepping down as CEO to serve as the Secretary of Commerce inside the Trump administration. With Lutnick no longer the CEO, his son Brandon Lutnick now leads Cantor Fitzgerald. This is another key relationship for the company that will potentially give them unique access to capital markets. Creating Value Twenty One, headquartered in New York City, will be concentrated on creating value in bitcoin terms. It remains to be seen what their exact strategy will be but we know they will be measuring their company’s performance in bitcoin. Will they implement a strategy similar to the company now known as Strategy…formerly Microstrategy( MSTR )? Here is a quote from Cantor’s press release . As part of its launch, Twenty One will introduce two key performance metrics, to reflect its Bitcoin-denominated capital structure and Bitcoin-focused mindset. Bitcoin Per Share ( BPS ): Amount of Bitcoin each fully-diluted share represents, reflecting shareholder ownership in Bitcoin rather than fiat earnings per share Bitcoin Return Rate (BRR): Rate at which BPS grows over time, denominating the company’s performance in Bitcoin Bitcoin Treasury Companies and Market Net Asset Value(MNAV) Currently, bitcoin treasury companies are often valued in terms of their market net asset value or MNAV which is a measure of the market value of the bitcoin they own less any debt on the balance sheet. Strategy( MSTR ) Since Twenty One will be a bitcoin treasury company, much like Strategy currently is, it is appropriate to measure them in relation to the amount of bitcoin they will hold when the merger is completed, as well as relative to how Strategy is being valued. As of Strategy’s latest press release , the company owns 580,250 bitcoin. As of 7/8/2025, bitcoin is valued at $109,000 giving Strategy an asset value of over $68 billion. Strategy’s total debt is $10.4 billion as of their March 2025 financial report leaving them with a MNAV of about $57.6 billion. Their current market cap is $112 billion giving them an MNAV of just below two. Twenty One Capital, Inc. and Their Bitcoin Holdings Twenty One Holdings expects the company to hold around 42,000 bitcoin post-merger which would make it the second largest bitcoin treasury company behind Strategy and third public company bitcoin treasury behind Strategy and MARA Holdings( MARA ). With bitcoin’s price at $109,000, it places the market value of their bitcoin at around $4.6 billion. Cantor Equity Partners Conversion Ratio The proposed merger is a reverse merger where the Cantor Equity Partners shares will convert into shares of Twenty One Holdings with the ticker symbol XXI. Public SPAC holders of Cantor Equity Partners are expected to hold 2.7 percent of the company after the merger is finalized. The company is expected to hold somewhere in the range of 42,000 bitcoin meaning the market value of its bitcoin at today’s price is (42,000 x $109,000) about $4.6 billion. Now, if we apply a similar MNAV to Cantor Equity Partners as Strategy currently has, that equals a projected market capitalization of $9.2 billion assuming the company has no debt. Cantor Equity Partners currently has 10 million Class A shares outstanding and a couple million class B shares as well but its unclear how all of that will convert to shares of Twenty One. For simplicity sake, I’m going to assume there’s around 10 million shares and those will convert 1 to 1 into XXI shares as we saw in the table graphic above. There is expected to be 371 million shares outstanding in the new entity, Twenty One Capital. Of the SPAC equity owners, they will receive 10 million shares of the 371 million shares outstanding or in this case, a 1 to 1 conversion. If that is in fact what happens, each CEP share will be worth ~$25/share assuming a total valuation of $9.2 billion. ($9.2 billion / 371 million shares) In the past month, Cantor Equity Partners’ price has declined from its all-time highs near $55 per share down to around $30 per share. This has it approaching a similar MNAV valuation as Strategy…around two times. Risks The risks to buying Cantor Equity Partners is varied. First, you are buying a bitcoin treasury company who will have a pure exposure to owning bitcoin. If you don’t want to own bitcoin, then owning shares of Cantor Equity Partners won’t be advisable. Second, we don’t have insight into the strategy of the new company, Twenty One Capital. If you buy Cantor Equity Partners today, then you are buying it blindly with the expectation that they will successfully implement their strategy to acquire more bitcoin per share. And it certainly possible and even likely that they do, but we don’t have insight into how they plan to do that at the moment. Third, although the conversion ratio of Cantor Equity Partners shares is approximately expected to be 1 to 1, we won’t know exactly how the conversion will look until after the merger takes place. Will the conversion ratio be 1 to 1 or will it be something less than that. Fourth, as we wait for the merger to finalize, bitcoin might appreciate significantly but with a certain degree of unknowns surrounding the merger, Cantor Equity Partners may fail to appreciate in price as fully as an established bitcoin treasury company like Strategy. This represents an opportunity cost which is present with any invesment. Conclusion I would consider Cantor Equity Partners as a hold for the moment. If you already own shares, I would not sell but it might be prudent to wait for the conversion into XXI shares to get a better idea of the value proposition. I think the new shares of XXI will be worth researching to understand their strategy to increase shareholder returns in bitcoin terms. The company will have a very impressive list of shareholders which could come together to create compelling value as they find creative ways to bring bitcoin to new and existing capital markets. As an alternative strategy to buying Cantor Equity Partners, one might hold Strategy shares until the merger takes place and convert shares into XXI shares after the merger. But for now, I rate Cantor Equity Partners a hold.

Source: Seeking Alpha