Cannabis blank check company Relativity Acquisition has sold 12.5 million units at $10 each, and its underwriters have a 45-day option to buy up to an additional roughly 1.9 million units, which could raise another $18.75 million. Relativity Acquisition’s common stock is set to trade on the Nasdaq under the symbol “RACY” (the units will trade at RACYU) and its offering is expected to close on February 15, 2022.
Relativity Acquisition said that while it’s primarily looking for businesses in the cannabis industry, it may also eventually combine with a company in sectors such as consumer packaged goods, health, and wellness, pharmaceuticals, or logistics.
The company is led by CEO and Chairman Tarek K. Tabsh, who has over 15 years of legal, commercial cannabis experience. In 2017, Mr. Tabsh co-founded and guided the initial vision and strategy for Oxford Cannabinoid Technologies, a UK-based pharmaceutical company that develops therapies targeting the endocannabinoid system, in areas such as pain and cancer, in partnership with Oxford University. Mr. Tabsh was instrumental in raising an institutional round of investment from one of the largest tobacco companies in the world.
The CFO is Steven Berg, a business leader with over 30 years of experience spanning investment banking to building prominent companies in the cannabis industry. Mr. Berg most recently was CEO of NWT Holdings, LLC (dba Firefly Vapor), from June 2017 to December 2019, a leader in cannabis vaporization technology and consumer products. The board includes John Anthony Quelch, Emily Paxhia, and Francis Knuettel II.
According to the company’s filing, it will seek to acquire a company that:
• Has an enterprise value of approximately $500 million to $1 billion;
• Has a market and/or cost leadership position and would benefit from our management expertise and extensive relationships (i.e., “rewards stellar management”);
• Occupies relatively fast-growing markets (i.e., “top line growth”);
• Has strong drivers of revenue and earnings growth and exhibits “barriers to competition”;
• Has the potential to generate strong and stable free cash flow;
• Is underperforming its operating potential and underutilizing its balance sheet.
The company said in its filing, “We believe that there are several types of target businesses that could benefit from our partnership and are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate. In the United States, this would currently include certain non-plant touching businesses that support the functioning of state-licensed commercial cannabis activity but are not directly related to cultivation, manufacturing, processing, branding, transportation, distribution, storage or sale of cannabis and cannabis-based products. Another set of eligible targets in the U.S. would include certain hemp derived cannabidiol (“CBD”) businesses that are compliant with the U.S. Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), which would include targets engaged in (i) cultivation and/or processing of hemp, (ii) the manufacturing of hemp extracts and/or extraction of cannabinoids from hemp, and/or (iii) branding, transportation, distribution, storage or sale of hemp-derived CBD.”