US cannabis website Leafly has agreed to go public by merging with a firm owned by Merida Capital Holdings, one of its biggest backers, in a deal valuing the combined entity at around US$532 million.
Leafly, which enables users to find, order and learn about cannabis, has benefited from the booming US industry and the prospects of federal reform. The Covid-19 pandemic has also seen website visits rise 12% from last year to more than 220 million.
Reuters reports the deal with blank-check firm Merida Merger Corp has an enterprise value of around $385 million.
CEO Yoko Miyashita said the deal gives the Seattle-based firm proceeds of up to $161.5 million to expand the business to growing and newly legalised cannabis markets such as New York.
She said: “We can grow even in the (Covid-19) constrained environment, let’s put capital on the balance sheet today to accelerate our growth coming out of this.”
The company projects 2021 and 2022 to be growth and investment periods after breaking even at the end of last year. Leafly estimates revenue to rise 19% year-on-year in 2021, followed by a 52% rise in 2022.
The deal is expected to close in the fourth quarter of this year and will see existing Leafly shareholders own around 72% of the combined company.
The company will be listed on the Nasdaq stock market under the ticker symbol ‘LFLY.’