CoinSmart Financial (NEO: SMRT) last night revealed it will be selling off a wholly owned operating subsidiary. The company has entered into an arrangement with Coinsquare, whereby it will sell off its Simply Digital Technologies subsidiary.
The arrangement will see the subsidiary acquired for an estimated figure of $29 million, made up of both cash and shares. A $3 million cash payment is to be made in connection with the purchase, as well as the issuance of 5.2 million common shares of Coinsquare, valued at $5.02 per each as of June 30. Upon certain achievements being met, a further 1.1 million shares and a $20 million cash payment is to be made to CoinSmart over a three year period.
Interestingly, however, shareholders of CoinSmart will be largely left out of the transaction, with the publicly traded entity to remain listed, while its operating subsidiary is carved out on a cash-free, debt-free basis. The remaining shell is expected to hold a 12% interest in Coinsquare, which is a privately held firm largely owned by Mogo (TSX: MOGO), as well as $10 million in cash and crypto assets. The co-founders of CoinSmart are also to join Coinsquare as part of the transaction.
Aside from its investment in Coinsquare and its cash, the company is expected to have no material assets on a post-transaction basis. The board has approved the transaction despite this, and recommends shareholders vote in favour of the transaction.
“We are thrilled to be working alongside the Coinsquare team to build one of the largest regulated crypto asset trading platforms in Canada and I could not be more proud of what we have accomplished so far. With a diversified product suite, exceptional crypto talent, and one of the largest user bases in Canada, the combined company will be well-positioned to pursue its aggressive expansion plans. While the crypto market is in the building phase of its life cycle, this transaction will provide the torque needed to be in a favourable position entering the next bull run,” commented CoinSmart CEO Justin Hartzman.
CoinSmart Financial last traded at $0.18 on the Neo.
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As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.