Anzu Special Acquisition Corp. I (NASDAQ: ANZU) announced this morning that it has signed a non-binding letter of intent (LOI) to combine with Envoy Medical at an equity value of approximately $150 million.

The US-based medical device company has developed and is in early clinical testing of fully implanted cochlear implants. Envoy Medical received “Breakthrough Device Designation” from the FDA in 2019 and was able to test its device on a patient at the Mayo Clinic in Q4’22. Looking ahead, Envoy Medical hopes to hit commercialization and be FDA approved by 2026.

Anzu said that it currently expects to file a definitive agreement with the company by the end of the month and will execute the agreement shortly after its stockholder meeting on February 9. The SPAC is hoping to gain shareholder approval at its upcoming meeting to extend its deadline to complete a business combination from March 4 to September 30, but intends to close the deal with Envoy in the first half of 2023. The Nasdaq has reserved the stock symbol of “COCH” for the prospective combined company.

The letter of intent requires Anzu to have at least $40 million in its trust account in order for the deal to close. The SPAC’s sponsor is expected to have a long-term commitment to Envoy Medical as it intends to forfeit significant common shares at closing, and will vest a portion of its shares until the medical company receives FDA approval. However, since an agreement has not been signed as of yet, this is still, for the most part, aspirational.

Additionally, sponsor affiliates are expected to make a multimillion dollar cash contribution to the PIPE at close. Envoy Medical shareholders are rolling 100% of their equity into the business combination.

But, Anzu’s deal is still just a non-binding LOI, so SPACInsider will not consider this deal as fully “announced”. As such, it will remain in the “Searching” category until a definitive agreement is signed.

The SPAC faced internal troubles this past summer regarding strategy, resulting in the loss of their CFO, General Counsel & Secretary, Chairman of the Board, and a Director, all of which have resigned. Its 8-K filing noted that at issue were the targets the company was evaluating as well as current market conditions.

Anzu announced the pricing of its upsized $420 million IPO in March 2021. The company originally set out to combine with an industrial technology target with sustained historical growth over multiple years in major markets.