Cannabis seed-to-sale technology provider MJ Freeway and MTech Acquisition agreed to merge their two businesses with plans to launch a new holding company that would be listed on the Nasdaq.
Under the deal, Denver-based MJ Freeway and MTech (NASDAQ: MTEC) will become subsidiaries of a newly created company named Pubco.
The merger, which is subject approval by equity holders of each company, is slated to close in early 2019, the firms announced Thursday.
The deal’s price tag wasn’t disclosed.
In a news release, Florida-based MTech described itself as the first U.S.-listed special purpose acquisition company (SPAC) focused on acquiring marijuana ancillary businesses.
The company completed a $50 million public offering and Nasdaq listing in January.
The combination follows a $10 million funding round closed by MJ Freeway in September.
The point-of-sale system and government traceability software provider has clients in 23 states and the District of Columbia as well as Australia, Canada, Europe, South America and Switzerland.
“With access to public capital markets and additional balance sheet strength as a result of this transaction, MJ Freeway will accelerate its growth and broaden its product offering as we strive to meet the ever-expanding demands of a highly complex and heavily regulated industry,” Jessica Billingsley, MJ Freeway’s co-founder and CEO, said in the news release.
Following the merger, MJ Freeway equity holders will get new shares of Pubco valued at $70 million, according to terms of the deal.
MTech security holders will swap their shares for Pubco shares. Once the deal closes, the newly formed company expects to be debt-free with more than $60 million in cash on its balance sheet.
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