(Reuters) -Modular building startup Boxabl will go public in the U.S. through a $3.5 billion merger with special purpose acquisition company FG Merger II ( FGMC ), the companies said on Tuesday.

Modular housing is widely recognized for its potential to deliver affordable, timely, and scalable housing solutions in both emergency and market-driven contexts.

Innovation in the housing market - a segment of the economy most sensitive to monetary policy - is also necessitated by rising housing prices, which hit a record high in June amid elevated interest rates and supply crunch.

The deal will allow Boxabl to expand its production capabilities and meet growing demand for its modular building systems, as well as invest in research and development.

Founded in 2017, Las Vegas-based Boxabl designs and manufactures foldable, modular homes. Known for its foldable 361 square foot "Casita" homes, some of the company's housing models can be purchased for as little as $19,999.

Boxabl is led by founders and co-CEOs Paolo and Galiano Tiramani. FG Merger will issue 350 million shares to Boxabl.

SPACs, also known as blank-check firms, raise capital through an initial public offering with the sole purpose of taking a private company public.

Listing shares via SPAC mergers allows companies to avoid some scrutiny that comes with the traditional IPO process.

Boxabl, which has raised over $230 million to date, has previously also used crowdfunding to raise capital, an alternative fundraising strategy that allows small everyday investors to buy shares in a company.

The company also adopted a bitcoin treasury strategy in May, allowing for a percentage of its assets to acquire the cryptocurrency.

The combined company will be listed on the Nasdaq under the symbol "BXBL."

Maxim Group and Winston & Strawn advised Boxabl, while Loeb & Loeb advised FG Merger.