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

California weed supplier HERBL is in talks to go public by merging with blank check company BGP Acquisition, at a valuation of about $600m

Santa-Barbara, California-based HERBL, has seen its post-merger enterprise value cut to between $450m and $500m in recent weeks, from over $630m in the original agreement reached with BGP around June, the sources said.

That would translate to an equity valuation of about $600m, down from around $800m 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 $50m from investors as part of a so-called public investment in private equity (PIPE) round, they added.

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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.

Source: Reuters

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