Leafly Cannabis Info Platform Goes Public Via Deal With Merida Merger Corp, The Combined Company Equity Projected At $532M

The cannabis information platform Leafly Holdings Inc. will go public via a business combination with a special purpose acquisition company Merida Merger Corp.(NASDAQ: MCMJ). Leafly confirmed Monday that it had signed a definitive agreement for the business combination through which Merida will take Leafly's name and that its common stock will list on NASDAQ under the ticker symbol ‘LFLY.’

The Seattle and New York-based company is known for having more than 125 million annual visitors, offering a subscription-based platform to more than 7,800 brands and 4,600 paying retail subscribers. Around 55% of U.S. licensed cannabis retailers are currently subscribed to its marketplace. 

Deal Specifics 

The combined company is projected to have a fully diluted business value of around $385 million, and an equity value of around $532 million, subject to any redemptions by Merida stockholders.

Under the deal, Leafly shareholders will roll 100% of their current stake in Leafly and upon closing will hold around 72% of the combined company on a pro forma basis, if the company obtains 100% of the proceeds in trust. 

The transaction is expected to generate proceeds of up to $161.5 million, subject to any redemptions by Merida stockholders, which Leafly plans to use to improve its marketing and platform technology and expand its marketplace. Boards of both Leafly and Merida have already unanimously approved the proposed transaction, which should be finalized in the fourth quarter. 

Oppenheimer & Co. acted as financial advisor to Leafly, while EarlyBirdCapital, Inc. served as financial advisor to Merida. The legal advisor to Merida was Graubard Miller while Weil, Gotshal & Manges LLP acted as legal advisor to Leafly. 

What’s In It For Merida Shareholders? 

According to Merida, the proposed transaction makes a smart investment opportunity for several reasons, such as: 

  • Leafly has a huge cannabis audience of around 10 million monthly unique visitors connected with more than 4,600 licensed stores in the U.S.;
  • The cannabis community largely uses Leafly’s data to find what it needs in the industry, and its compliance-forced platform helps consumers gain trust and comprehend different regulatory frameworks;
  • The company has subscription and advertising revenue from licensed retailers and brands; 
  • Leafly is expected to speed up retail monetization, with retailers already seeing 14x Return on Ad Spend; The company has projected revenue of around $43 million in 2021E and $65 million in 2022E, which indicated around 52% of year growth with gross margins of around 88%. 

CEO of Leafly Yoko Miyashita, who will continue to run the company upon the transaction, noted they are thrilled to team up with Merida to build more value for their consumers, partner and shareholders. 

"For the past decade, we have focused on building a unique, legally compliant marketplace with an equal emphasis on educating consumers and enabling them to reserve cannabis products from legal, reputable providers,” Miyashita stated. “With this transaction, we are looking forward to entering the next phase of our company's journey – creating more personalized consumer experiences, driving more value to our retail partners, amplifying brands on our platform, and further scaling our presence in local markets as legalization continues. Our consumers recognize Leafly as one of the most trusted brands in cannabis, and we do not take that trust for granted.”

Photo: Courtesy of Leafly

Posted In: EarlyBirdCapitalGotshal & Manges LLPGraubard MillerInc.Leafly Merida Merger DealLeafly To Go PublicOppenheimer & Co.WeilYoko MiyashitaCannabisNewsMarkets

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