Grindr discloses buyout proposal at $18 per share
While two huge shareholders are hoping to buy out Grindr stock at a premium, it was above $20 as recently as July.
Grindr soared on Friday after it disclosed a take-private proposal that would value the company at $18 per share.
James Lu and Raymond Zage, who together already own more than 60% of the gay dating app, proposed to buy the remaining shares of the company and delist it from the New York Stock Exchange. The premium would be more than 50% from where the stock was trading before rumblings of the proposal were first reported.
Lu and Zage are requesting a response from the board by October 31.
The investors first informed Grindr’s board that they were exploring taking the company private on October 13. The next day, Semafor reported that a take-private deal was in the works, sending the stock climbing higher.
According to Semafor, Zage and Lu had pledged nearly all of their Grindr stock for personal loans. The loans became undercollateralized following the stock’s recent slide, which led their lender to seize and sell some of their shares in Grindr.
While they are buying out Grindr shares at a premium, the stock was above $20 as recently as July. The company has generally performed better than its peers, though its most recent revenue numbers disappointed Wall Street.
In a recent interview with Sherwood News, Grindr CEO George Arison described the company’s push toward AI and its goal to build a suite of products that cater to the audience on its flagship app. It hasn’t always been easy to communicate that to Wall Street, he said.
“Most investors don’t use our product at all,” he said. “We are very big in a certain set of users, but everybody else does not know our product at all.”
In the proposal, Lu and Zage said they “are firmly aligned with management and have no intentions of making any changes to the leadership” if the deal were to close.
Lu and Zage acquired Grindr in 2020 from the Chinese firm Kunlun. The move came after the Committee on Foreign Investment in the United States determined it was a national security risk for a company with sensitive data to be Chinese-owned. The investors also led Grindr’s initial public offering in 2022.
Grindr declined to comment on the buyout proposal. In a statement, Lu and Zage said they have “received considerable initial interest from both debt and equity investors in participating in this opportunity.”
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