ContextLogic Inc WISH saw its shares soar today following the announcement of its planned divestment of assets and liabilities related to its Wish ecommerce platform for approximately $173 million.
The company has struck a deal with Qoo10, an ecommerce platform operating localized online marketplaces in Asia, for the divestment.
This sale represents $6.50 per share, a premium of about 44% to ContextLogic’s closing stock price as of February 9, 2024.
ContextLogic began exploring strategic alternatives in November 2023 to maximize shareholder value.
Upon the completion of the transaction, ContextLogic will have reduced operating expenses and a debt-free balance sheet, boasting net cash proceeds from the asset sale, approximately $2.7 billion of Net Operating Loss (NOL) carry forwards, and certain retained assets.
The board plans to use the proceeds from the transaction to monetize its NOLs and evaluate the possibility of engaging a financial sponsor to realize the value of its tax assets.
Joe Yan, CEO of ContextLogic, commented, “Integrating the Wish platform into Qoo10 will create a true global cross-border ecommerce platform to support the massive market demand. Upon close, we expect the new Wish platform will have an improved customer experience through increased product assortment and merchant selection. And for our merchants, we will be able to offer fully integrated logistical capabilities to deliver unmatched cost-efficient services with high quality control and transparency.”
The company anticipates completing the transaction in the second quarter of 2024, subject to customary closing conditions.
In a move to safeguard its ability to utilize its substantial NOLs in the future, the board has unanimously adopted a tax benefits preservation plan.
The company intends to present the Plan to its stockholders for a vote at its 2024 annual stockholders meeting, expected in the second quarter of 2024.
Price Action: WISH shares surged by 48.4% to $6.67 at the latest check on Monday.
