ContextLogic Announces Sale of E-Commerce Platform Wish to Qoo10 for US$173M
In a recent development, ContextLogic Inc., operating as Wish, unveiled its plan to sell a significant portion of its operating assets, primarily its Wish ecommerce platform, to Qoo10, an ecommerce giant in Asia. The agreement, unanimously approved by ContextLogic's Board of Directors, entails a cash transaction valued at approximately $173 million, subject to specific adjustments in the purchase price. This equates to roughly $6.50 per share, marking a substantial 44% premium over ContextLogic's closing stock price on February 9, 2024.
Following the transaction's completion, ContextLogic anticipates a considerable reduction in operating expenses and a debt-free balance sheet. With net cash proceeds of approximately $2.7 billion from the asset sale, coupled with retained assets and Net
Operating Loss (NOL) carryforwards, the company aims to leverage these funds to monetize its NOLs. Additionally, the Board is exploring opportunities to engage a financial sponsor to optimize the value of its tax assets. Should no suitable avenues for monetization arise, the Board plans to promptly distribute all capital to shareholders.
“The Board conducted a thorough review of strategic alternatives with the assistance of outside financial and legal advisors. We evaluated a variety of potential outcomes and determined that the proposed sale of our operating assets and liabilities, while preserving significant NOLs, represents the best path forward to maximize value for shareholders. We also believe there is a significant upside potential to obtaining a long-term aligned capital partner that would support future value creation.” explained Tanzeen Syed, Chairman of the Board.
In the meantime, Joe Yan, CEO of ContextLogic, highlighted the potential synergy between Wish and Qoo10, envisioning the creation of a global cross-border ecommerce platform to meet burgeoning market demands. The integration aims to enrich customer experience with expanded product offerings and streamlined logistical capabilities for merchants, fostering cost-efficiency and quality control.
Post-transaction, the Wish brand will integrate into the Qoo10 family, offering merchants access to cross-border ecommerce opportunities and users an extensive selection of competitively priced goods. Qoo10 CEO and Founder, Young Bae Ku, expressed enthusiasm about merging Wish's innovative technology with Qoo10's operational expertise, anticipating heightened success for merchants and consumers alike.
The transaction, slated for completion in the second quarter of 2024 pending shareholder approval and customary closing conditions, signals a pivotal moment for both companies. In parallel, ContextLogic has implemented a tax benefits preservation plan to safeguard its substantial NOLs, with details to be disclosed in a forthcoming filing with the U.S. Securities and Exchange Commission.
