Cannabis test site Weedmaps goes public after signing of $ 1,5 billion deal
Weedmap said Thursday that it has agreed to go public through a merger with Silver Spike Acquisition Corp. Weedmaps is a community cannabis site that allows users to review and discuss cannabis strains and cannabis dispensaries near their homes. WM Holding Company, a tech company that operates the US online platform Weedmaps where users find and rate marijuana sellers.
Weedmaps' IPO deal, which values the company at around $ 1,5 billion, is a rare example of a company focused on bringing the cannabis industry to a U.S. stock exchange. Companies cannot list their stocks in the United States if their business is selling marijuana or “touching plants,” which Weedmaps cannot.
“When you look at what we are offering (to investors), there really isn't much that compares,” Chris Beals, CEO of WMH, said in an interview.
Weedmaps, based in Irvine, Calif., was founded in 2008 by Doug Francis and Justin Hartfield. It sells a cloud-based operating system for cannabis retailers and hosts a review and rating platform for sellers.
Weedmaps expects to receive gross revenue of up to $ 575 million from this transaction, in part thanks to funds raised by Silver Spike and also thanks to a private investment of $ 325 million in a public private equity transaction. , or PIPE. PIPE investors include funds from Federated Hermes Kaufmann Funds, Senvest Management LLC and AFV Partners
$ 1,5 billion valuation through merger with special purpose acquisition company
Silver Spike shares were listed up 8,8% to $ 11,41 in pre-market trades. The agency Reuters published its first information on the operation on Wednesday.
The merger deal comes less than a week after the United States House of Representatives voted to decriminalize marijuana at the federal level. This is the first time that either house of Congress has voted to end the federal ban on marijuana since the drug was classified as a “controlled substance” in 1970.
The legislation is not expected to progress as long as the Senate remains in Republicans' hands. Nonetheless, 15 states in the United States and the District of Columbia have legalized the recreational use of marijuana, and more than 30 states allow some form of the drug for medical purposes.
Weedmaps is on track to generate $ 160 million in revenue and has been profitable for its entire 12-year history, Mr. Beals said.
Silver Spike is a Specialty Acquisition Company (SPAC), which raises funds through an initial public sale offer (IPO) in order to purchase a private company. The acquired company then becomes public following the merger and constitutes an alternative to the traditional IPO process.
SPAs have become an increasingly popular gateway to the stock market for private companies, as they can be completed faster than an IPO and there is greater certainty about funds that a company will raise.
Silver Spike, led by cannabis industry executive Scott Gordon, raised $ 250 million in an IPO on the Nasdaq in August 2019, with a focus on buying a company in the industry cannabis.
“There was no better opportunity, nor a more dynamic business and history we could consider a transaction with than with WMH,” Gordon said in an interview.