California weed supplier HERBL in talks to go public via SPAC merger - sources

Ark Solutions

12/08/2021 16:57

By Shariq Khan and Anirban Sen
    Aug 12 (Reuters) - California weed supplier HERBL is in
talks to go public by merging with blank check company BGP
Acquisition  BGPu.NLB , at a valuation of about $600 million,
sources familiar with the matter said, one of several U.S.
cannabis companies tapping funds in anticipation of potential
federal reforms.
    Santa-Barbara, California-based HERBL, has seen its
post-merger enterprise value cut to between $450 million and
$500 million in recent weeks, from over $630 million in the
original agreement reached with BGP around June, the sources
said.
     That would translate to an equity valuation of about $600
million, down from around $800 million in the previous
agreement, they added.
    BGP, a Special Purpose Acquisition Company (SPAC) formed by
former Goldman Sachs banker Ruth Epstein, has been trying to
raise roughly $50 million from investors as part of a so-called
public investment in private equity (PIPE) round, they added.
    But it has been challenging for BGP to raise the money it
needs to fund the deal at a high valuation, the sources said, so
deal terms have been renegotiated to make them more attractive
to potential investors.
    A PIPE is a funding round that typically goes hand-in-hand
with a SPAC merger and helps provide necessary financing for
such deals.
    By merging with BGP, HERBL's shares will be listed on the
NEO exchange in Canada, a country in which it does not do any
business.
    There is no certainty that BGP will succeed in raising its
PIPE funding or completing the deal, the sources cautioned, and
HERBL could also decide to stay private. 
    HERBL declined to comment, while BGP did not respond to
Reuters' requests. Sources declined to be identified because the
discussions are confidential.

 (Reporting by Shariq Khan and Anirban Sen in Bengaluru
Editing by Denny Thomas and David Gregorio)
 ((Shariq.Khan@thomsonreuters.com; Within U.S.+1 646 223 8780,
outside U.S. +91 80 6182 2681; Twitter: @shariqrtrs;))