WM Holding Company, LLC, the Leading Technology Platform to the Cannabis Industry, to List on Nasdaq Through Merger With Silver Spike Acquisition Corp.
- WM Holding Company, LLC (“WMH” or “WM Holding”) operates Weedmaps, the leading online listings marketplace for cannabis consumers, and WM Business, a comprehensive software-as-a-service (“SaaS”) subscription offering for cannabis retailers and brands
- The merger advances WM Holding’s mission to power a transparent and inclusive global cannabis economy and capitalize on its position as the largest technology provider in the sector
- The estimated post transaction equity value of the combined Company is approximately $1.5 billion and provides up to $575 million of gross proceeds through the approximately $250 million of cash held-in-trust by Silver Spike Acquisition Corp. and a fully-committed common stock PIPE of $325 million
- As a result of outsized demand, the PIPE offering was significantly oversubscribed and upsized, including investment from funds managed by AFV Partners, the Federated Hermes Kaufmann Funds and Senvest Management LLC along with a $35 million commitment from Silver Spike Capital
- WM Holding’s executive officers will retain 100% of their equity in the combined company, which will have approximately $100 million of cash on hand after closing
IRVINE, Calif., December 10, 2020–(BUSINESS WIRE)–WM Holding Company, LLC (“WMH” or the “Company”) and Silver Spike Acquisition Corp. (Nasdaq: SSPK) (“Silver Spike”), a publicly-traded special purpose acquisition company, announced today a definitive agreement for a business combination that would result in WMH becoming a public company. The combined company will be led by Chris Beals, Chief Executive Officer of WMH, and is expected to remain listed on the Nasdaq Stock Market.
Company Overview
Founded in 2008, WMH operates Weedmaps, the leading online listings marketplace for cannabis consumers and businesses, and WM Business, the most comprehensive SaaS subscription offering sold to cannabis retailers and brands. The Company solely provides software and other technology solutions and is non-plant touching. WMH has grown revenue at a CAGR of 40% over the last five years and is on track to deliver $160 million in revenue and $35 million in EBITDA for 2020.
The cannabis market in the U.S. is expected to double over the next five years as the majority of U.S. adults support having legal access to cannabis. Despite these expectations of growth, cannabis users in the U.S. are still a small sub-segment of the population today, and retail density is still low across the majority of states with regulated legal cannabis markets. The regulations related to these markets are often complex and disparate across states as well as cities and counties within regulated states. Cannabis itself is a highly complex and non-shelf stable consumer product. These dynamics present a challenging and sometimes uncertain environment for consumers seeking legal cannabis products and for businesses selling to cannabis users while operating in a compliant fashion.
WMH addresses these challenges with its Weedmaps marketplace and WM Business SaaS subscription offering. Over the past 12 years, Weedmaps has grown to become the premier destination for cannabis consumers, with over 10 million monthly active users and over 18,000 business listings across every U.S. state, the District of Columbia and Puerto Rico with a legal cannabis market. Clients of the Company maintain listings in 9 international countries outside of the U.S. Through the Weedmaps website and mobile apps, WMH provides consumers with information regarding cannabis retailers and brands, as well as the availability of cannabis products, facilitating product discovery and online order-ahead for pickup or delivery by participating retailers.
The Company’s cloud-based WM Business SaaS subscription offering provides cannabis retailers with an end-to-end operating system to access valuable users, grow sales and scale their businesses at a compelling return-on-spend. This “business-in-a-box” functionality ranges from integrations supporting product menus that have online order-ahead, delivery order fulfillment software, data & analytics, a point-of-sale solution and a wholesale marketplace. WMH has been investing in and optimizing its WM Business software solution to also facilitate compliance for businesses amidst the complex, disparate and constantly evolving regulations governing the cannabis industry. Underlying this compliance functionality is a proprietary and sophisticated rules engine that is a core underpinning of the WM Business SaaS platform.
Chris Beals, WMH’s Chief Executive Officer, will continue to lead the Company along with the existing management team. Silver Spike’s CEO and Chairman, Scott Gordon, will join the merged company’s Board of Directors upon completion of the transaction.
Management Comments
“We are thrilled to partner with Silver Spike to transition WMH to our next phase of growth as a public company,” said Chris Beals, CEO of WMH.
We passionately believe in the power of cannabis and the importance of enabling safe, legal access to cannabis for consumers worldwide. With this merger, we will be able to continue scaling the Weedmaps marketplace in the U.S. and internationally in service of our users while expanding the functionality of our WM Business SaaS offerings in service of our clients.
Chris Beals, CEO of WMH
Our partnership with Silver Spike will provide us a stronger platform to advance our mission to advocate for legalization, social equity and licensing in many jurisdictions while providing cannabis businesses with the tools needed to succeed in a highly complex world of regulations.
“I am grateful for the continued support from my teammates and investors and most thankful for the thousands – and what I expect over time to be hundreds of thousands – of business clients on our platform. We are energized by the opportunities to continue helping our business clients thrive as regulated cannabis markets expand and grow,” Beals continued.
Scott Gordon, CEO and Chairman of Silver Spike, commented, “We believe WMH is the most compelling investment opportunity in cannabis today. We established Silver Spike Acquisition Corp. to identify and partner with a best-in-class company and proven management team that are well positioned to benefit from the macro drivers surrounding cannabis. We wanted to not only assist them with the transition to the public markets but also create a unique opportunity worthy of institutional investors. WMH is the perfect expression of our vision for Silver Spike Acquisition Corp.
Their business is transforming the eCommerce experience for cannabis by combining the largest audience of frequent cannabis users with the broadest set of brands and retailers and supporting those businesses with the complete tech stack for cannabis. They have created a 12-year advantage and solved very thorny issues, such as normalizing product data to drive user conversion or embedding compliance functionality throughout their software, while building the only comprehensive “business-in-a-box” software solution for cannabis retailers. We are beyond excited to work with Chris and the incredibly-talented WMH team to support their vision of helping licensed cannabis businesses thrive while driving growth and returns for our shareholders.”
Transaction Overview
The estimated post transaction equity value of the combined Company is approximately $1.5 billion, assuming the $10.00 per share PIPE price and no redemptions by Silver Spike shareholders. The transaction will provide up to $575 million of gross proceeds (assuming no redemptions), including $325 million through a fully-committed common stock PIPE at $10.00 per share. The PIPE includes commitments from existing investors including Silver Spike Capital, and new institutional investors including funds managed by AFV Partners, the Federated Hermes Kaufmann Funds and Senvest Management LLC.
The transaction, which has been unanimously approved by the Boards of Directors of WMH and Silver Spike, is subject to approval by Silver Spike’s shareholders and other customary closing conditions. Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Silver Spike with the Securities and Exchange Commission and will be available at www.sec.gov. Additional information can be found on the WMH Investor Relations page at www.weedmaps.com/investors.
Advisors
Rothschild & Co. is serving as exclusive financial and capital markets adviser and Cooley LLP is serving as legal advisor to WM Holding, LLC. Stifel, Nicolaus & Company, Incorporated and Piper Sandler & Co. are serving as joint placement agents and financial advisors and Davis Polk & Wardwell LLP is serving as legal advisor to Silver Spike Acquisition Corp. Gibson, Dunn & Crutcher LLP is serving as legal advisor to the founders of WM Holding.
Investor Conference Call Information
WMH and Silver Spike will host a joint investor conference call to discuss the proposed transaction Thursday, December 10, 2020 at 8:30am ET. Interested parties may listen to the prepared remarks via telephone by dialing 1-800-585-8367 (U.S.) or 1-416-621-4642 (International) and entering Conference ID: 7745849.
To listen to the prepared remarks via audio webcast, go to WMH’s investor website, at https://weedmaps.com/investors. The investor presentation will also be furnished today to the SEC, which can be viewed at the SEC’s website at www.sec.gov.
About WM Holding Company, LLC
WM Holding’s mission is to power a transparent and inclusive global cannabis economy. Now in its second decade, WMH has been a driving force behind much of the legislative change we’ve seen in the past 10 years.
WM Holding Company, LLC (“WM Holding” or “WMH” or “the Company”), parent company of Weedmaps and its WM Business SaaS offering, is the leading technology and software infrastructure provider to the cannabis industry. Founded in 2008, WMH is the leading two-sided marketplace and SaaS provider to the cannabis industry, comprising the Company’s B2C marketplace, Weedmaps, and its B2B software, WM Business. The Company’s cloud-based SaaS solutions provide an end-to-end operating system for cannabis retailers. These tools support compliance with the complex, disparate and constantly evolving regulations applicable to the cannabis industry. Underlying this compliance functionality is a proprietary and sophisticated rules engine that is a core underpinning of the WM Business SaaS platform. Through its website and mobile apps, WM Holding provides consumers with the latest information, data and availability of cannabis products, facilitating product discovery and driving sales for our customers. The Company holds a strong belief in the power of cannabis and the importance of enabling safe, legal access to consumers worldwide. Since inception, WMH has worked tirelessly, not only to be the most comprehensive platform for consumers, but to build the software solutions that power businesses compliantly in the space, to advocate for legalization, social equity, and licensing in many jurisdictions, and to facilitate further learning through partnering with dozens of subject matter experts on providing detailed, accurate information about the plant.
Headquartered in Irvine, California, WMH employs approximately 400 professionals around the world, including in Denver, New York, Ontario, Canada and Barcelona, Spain. Visit us at www.weedmaps.com/investors.
About Silver Spike Acquisition Corp.
Silver Spike Acquisition Corp. (SSAC), an affiliate of Silver Spike Capital, is a blank check company formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses.
The management team and board of directors are composed of veteran cannabis and finance industry executives and founders, including Scott Gordon, founder, and CEO of the Company, who began investing in the cannabis industry in 2014 and in 2016 co-founded and became Chairman of Egg Rock Holdings, the parent company of the Papa & Barkley family of cannabis products with related subsidiary assets in manufacturing, processing and logistics; and Dr. Orrin Devinsky, director of the Company, who is the director of the NYU Langone Comprehensive Epilepsy Center and is a Professor of Neurology, Neuroscience, Psychiatry, and Neuroscience at the NYU School of Medicine and who, since 2016 has served as the Chair of the Medical Advisory Board at Tilray, a pharmaceutical and cannabis company.
About Silver Spike Capital
Silver Spike Capital is an investment manager focused on the cannabis and alternative health & wellness industries. The firm offers diversified private credit and equity-related investment opportunities in the emerging and rapidly accelerating state and federally compliant cannabis, hemp, and other cannabinoid sectors. Silver Spike also manages a venture fund focused on the nascent psychedelics industry.
With over three decades of investment experience, Silver Spike’s investment professionals include early cannabis investors, entrepreneurs, operators, and researchers as well as emerging market finance veterans experienced in complex legal and regulatory characteristics that mirror the current cannabis landscape today.
Silver Spike Capital is headquartered in New York with a satellite office in Toronto. To learn more, please visit us at www.silverspikecap.com.
