MJ Biz write
The share price of Weedmaps’ parent, WM Technology, popped Wednesday morning after its co-founders submitted a proposal to take the California company private.
Investors sent shares of the Irvine-based company – which trades as MAPS on the Nasdaq exchange – up nearly 25% on word of the potential deal and boosting its market cap to roughly $255 million.
In a letter sent to shareholders on Tuesday and obtained by MJBizDaily, Weedmaps’ co-founders and its largest shareholders, Doug Francis and Justin Hartfield, submitted a nonbinding cash bid to acquire all outstanding shares of common stock for $1.70 per share.
Weedmaps-co-founders-letterThe proposal represents:
- A 39% premium on Tuesday’s market close.
- A 52% premium on implied enterprise value as of Tuesday.
- A 65% premium to the volume-weighted average price in the past year.
“We firmly believe that our proposed Transaction is in the best interests of WM stockholders as well as all WM stakeholders, including its employees, clients, and end-users,” Francis and Hartfield wrote in the letter.
Weedmaps faces ‘significant headwinds’
When Weedmaps went public in June 2021 after a merger with special purpose acquisition company (SPAC) Silver Spike Acquisition Corp., there was an expectation the advertising platform and consumer marketplace would capitalize on growth opportunities with the backing of institutional investors and a Nasdaq listing, the co-founders noted in their letter.
“Today, however, WM is facing significant headwinds, with licensed end-markets continuing to decline from the peak volumes achieved at the time of the Company’s deSPAC transaction in 2021,” the letter stated.
“Further, the continued consolidation of cannabis retailers and brands among large multi-state operators, coupled with the increased entry of traditional technology providers into cannabis, are creating significant risks for WM’s current business model as a public company.
“Our proposal would provide public stockholders with immediate liquidity and certainty of value at a significant premium to current trading levels.”
WM Technology has lost more than $2.3 billion in enterprise value since going public, according to MJBizDaily research.
Plan to finance Weedmaps
To finance the deal, Francis and Hartfield plan to roll their equity interest in the company – roughly 32% of common shares outstanding – as they attract proposals for debt and equity financing.
They hired investment banking firm Jefferies as financial adviser and Cadwalader, Wickersham & Taft as legal counsel to handle the transaction. Both are headquartered in New York.
The proposal must be approved by Weedmaps’ board and majority shareholders.
The co-founders, according to the letter, will not vote in favor of an alternative or competing bid or sale.
They expect to execute a definitive agreement in three to four weeks.
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