Tiny To Go Public Via Reverse Takeover Of WeCommerce
It appears that the founders of WeCommerce (TSXV: WE) are dissatisfied with the performance of the company since the go-public transaction that occurred back in late 2020. It was announced this morning that Tiny, the original founder of the company, will be reacquiring the software firm in what will effectively amount to a reverse takeover transaction.
The re-combined businesses will see a public entity emerge that in 2021 had pro-forma revenues of $149 million and adjusted EBITDA of $49.7 million. The firm meanwhile is expected to have cash of $42 million on hand and $130 million in debt as of December 31, 2022.
The transaction will see WeCommerce ascribed a value per share of $5.12 – a 161% premium to Friday’s close – which places the firm at a valuation of $220 million, while Tiny will be valued at $691 million and excludes the existing ownership interest of WeCommerce by Tiny. Proforma, the firm is anticipated to have an enterprise value of $962 million.
Post-transaction, current WeCommerce shareholders are to account for 24.1% of the combined company, with the firm taking on the Tiny name going forward. Tiny co-founder Andrew Wilkinson meanwhile will own a 71% stake in the firm, while co-founder Chris Sparling will own 10% of the company. Both are to take on the role of co-CEO upon the completion of the transaction.
Current WeCommerce CFO David Charron is to remain in his role with the company, while Tiny CFO Ampere Chan, will become president of the firm. WeCommerce CEO Alex Persson meanwhile is being ousted from the firm as part of the transaction.
Following the close of the transaction, the entity is expected to have three core operating segments and several standalone businesses in its portfolio. Segments are to consist of Beam, Dribbble, and WeCommerce, while standalone operations are to consist of Meteor Software and We Work Remotely, among others.
The transaction remains subject to minority shareholder approval, with 39.9% of disinterested shareholders agreeing to vote in favor of the transaction. A special meeting of the shareholders is currently slated to occur in April 2023.
WeCommerce last traded at $1.96 on the TSX Venture.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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.
Transaction between two related companies. Comparative values can be whatever you want them to be!
Can you help me understand the implied equity price of WeCommerce at its current share price ($3.01)? The company is trading at ~$125mm market cap, if they’re diluting equity 3.5-4x, wouldn’t that put implied equity value around 600mm? Very new to this stuff as you can tell.