Seed-to-sale technology provider MJ Freeway LLC has agrred to a merger with MTech Acquisition Corp.MTEC, -0.48 %, the first US-listed Special Purpose Acquisition Company focused on acquiring a business ancillary to the cannabis industry.
Following the consummation of the transaction, MTech and MJ Freeway will become subsidiaries of a newly-formed holding company to be listed on the NASDAQ (NDAQ) Stock Market. According to the company statement, if there are no redemptions by MTech shareholders in connection with the MTech shareholder vote to approve the transaction, it is anticipated that the combined entity will be debt free and have over $60 million of balance sheet cash to take advantage of strategic growth opportunities.
“We built MJ Freeway to be the technology infrastructure for the cannabis industry,” said Jessica Billingsley, Co-Founder & CEO of MJ Freeway. “With access to public capital markets and additional balance sheet strength as a result of this transaction, MJ Freeway will accelerate its growth and broaden its product offering as we strive to meet the ever-expanding demands of a highly complex and heavily regulated industry.”
Scott Sozio, Chief Executive Officer of MTech, said, “We believe technology solutions that empower operators to efficiently and compliantly run their business, with tools that track the full vertical from cultivation to consumer, are critical to the industry’s long-term success. We believe MJ Freeway provides the most robust seed-to-sale software technology available today, positioning the company for enormous growth as the legalization of cannabis expands throughout the country and the world.”
The company statement said that MJ Freeway equityholders will receive new shares of the newly merged company (“Pubco”) and MTech security holders will exchange their securities of MTech for securities of Pubco. The shares of Pubco common stock to be issued to the MJ Freeway equity holders will have an aggregate value equal to $70,000,000, with each share of Pubco common stock valued at $10.16 per share.
Cash proceeds released from MTech’s trust account, which trust account currently has approximately $58 million in cash, after any shareholder redemptions and payment of transaction expenses and other MTech liabilities, shall remain with the combined company. MJ Freeway equityholders are rolling 100% of their equity into the combined entity.
MJ Freeway is the developer of the cannabis industry’s first enterprise resource planning platform and is the largest global cannabis technology company which has tracked more than $10 billion in sales with clients in Australia, Europe, South America, New Zealand, Africa, Canada, and the United States in 29 states and the District of Columbia. MJ Freeway’s tracking software includes inventory control and grow management applications to streamline workflow and increase efficiency. MJ Freeway’s Leaf Data Systems software solution enables governments to track cannabis plants from seed-to-sale and ensure patient, public, and product safety.
Current MJ Freeway investor and Senior Strategic Advisor to the Board, Roger McNamee, added, “Cannabis companies that want to be leaders are adopting MJ Platform because I believe it is the only product with the technical foundation to support multi-line and multi-location operations. MJ Freeway prepares customers to manage high growth and complexity as the industry transitions from local to global scale. MJ Freeway’s merger with MTech will enable a smart growth strategy to capitalize on the industry’s continuing growth.”