By Dean Seal

Shares of WM Technology, operator of the cannabis marketplace Weedmaps, surged after its founder and its current chief executive offered to take the company private at $1.70 a share.

The stock climbed 28% to a high of $1.56 in the first half of Wednesday's trading day, hitting a 52-week high.

Doug Francis, the executive chair who took over as CEO last month, and Justin Hartfield, who founded the company in 2008 and served as CEO until 2016, sent a letter to the board on Tuesday offering an all-cash transaction.

Francis and Hartfield said the decision to take the company public in the first place was based on expectations that tailwinds would emerge in 2020 and 2021 across licensed cannabis end markets. They also expected support from institutional public equity investors to help WM capitalize on growth opportunities.

"Today, however, WM is facing significant headwinds, with licensed end markets continuing to decline from the peak volumes achieved at the time" that the company was taken public by combining with a blank-check company in 2021, the letter said.

The duo said WM's current business model as a public company faces risks from traditional technology providers increasingly entering the cannabis industry. They are offering to provide stockholders with immediate liquidity at a significant premium, the letter said.

Francis and Hartfield said they would roll their stakes in the company, equal to about 32% of the company's outstanding shares, and buy the rest for $1.70 per share. They have received proposals from potential financing partners and are confident they could secure debt and equity financing for the deal.

The proposal is conditioned upon receiving approval and a recommendation from a special board committee of disinterested, fully independent directors. The pair also said they would be willing to negotiate with another potential buyer should a competing offer be submitted, though they don't think its likely one would be submitted and wouldn't plan to vote in favor of it.

The co-founder and CEO said they expect to be in a position to execute a definitive agreement in the next three to four weeks.

A representative from WM didn't immediately respond to a request for comment.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

December 18, 2024 12:41 ET (17:41 GMT)

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