SEATTLE and NEW YORK, Aug. 9, 2021 /PRNewswire/ -- PRESS RELEASE -- Leafly Holdings Inc., an online cannabis discovery marketplace and resource for cannabis consumers, and Merida Merger Corp. I (NASDAQ: MCMJ), a special purpose acquisition company sponsored by Merida Capital Holdings, today announced that they have entered into a definitive agreement with respect to a business combination. Upon completion of the proposed transaction, Merida will adopt the Leafly name and its common stock is expected to be listed on the NASDAQ under the ticker symbol LFLY. The transaction values the combined company at an implied, fully diluted enterprise value of approximately $385 million and equity value of approximately $532 million, subject to any redemptions by Merida stockholders.
Based in Seattle, Wash., Leafly is a content-first, community-driven, three-sided marketplace that attracts the world's largest cannabis audience. Across its website and mobile app, Leafly empowers a highly engaged audience of more than 125 million annual visitors to understand, select and reserve cannabis products from licensed retailers.
Leafly provides a subscription-based platform for more than 7,800 brands and 4,600 paying retail subscribers. Approximately 55% of North American retail licensees are currently subscribed to its marketplace and advertising services. As a non-plant touching platform with leading brand recognition, a user-friendly experience, and an established position in core growth markets, Leafly is well positioned to capitalize on accelerating legalization trends and e-commerce adoption across North America.
Yoko Miyashita, chief executive officer of Leafly, said, "For the past decade, we have focused on building a unique, legally compliant marketplace with an equal emphasis on educating consumers and enabling them to reserve cannabis products from legal, reputable providers. With this transaction, we are looking forward to entering the next phase of our company's journey – creating more personalized consumer experiences, driving more value to our retail partners, amplifying brands on our platform, and further scaling our presence in local markets as legalization continues. Our consumers recognize Leafly as one of the most trusted brands in cannabis, and we do not take that trust for granted. We are excited to partner with Merida's deeply experienced team to create even more value for our consumers, partners and shareholders."
Peter Lee, president of Merida Merger Corp. I, commented, "Merida Capital is very excited to be involved in this transformative event for Leafly. We have seen firsthand how consumers respond to Leafly's innovative technology and proprietary insights. Leafly has a proven flywheel and clear and achievable growth plans, and we look forward to leveraging our team's demonstrated track record with other high growth ancillary cannabis companies to support their transition to the public market."
Leafly Investment Highlights
Merida believes the proposed transaction with Leafly presents an attractive investment opportunity for shareholders for a number of reasons, including:
Shoppers, retailers, and brands trust Leafly to make cannabis understandable and accessible:
- Leafly has developed the most extensive content library in the cannabis market, attracting the largest audience in cannabis
- The cannabis community relies on Leafly's strain database (5,000+ strains), cannabis coverage (11,000+ articles), and user reviews (1.3MM+ reviews) to navigate the highly complex and evolving world of cannabis
Community-driven, three-sided marketplace with retailers, brands, and high-value shoppers:
- Leafly's audience of 10 million monthly unique visitors connects with over 4,600 licensed stores across North America
- The company generates subscription and advertising revenue from licensed retailers and brands
A flexible platform that scales and sits at the center of the $19 billion rapidly growing legal cannabis market:
- The cannabis market is large and expanding rapidly with states continuing to legalize as a result of broad support for legalization
- Consumers use Leafly to learn about cannabis, the cannabis industry, and cannabis politics before their states legalize, giving Leafly a head start
As consumer ordering shifts online, Leafly helps consumers navigate a complicated industry:
- Markets are evolving to the right supply/demand dynamics to enable the cannabis e-commerce market, a trend which was accelerated by COVID
- Leafly garners consumer trust through its strong focus on compliance and by helping consumers navigate dynamic regulatory environments
Leafly is at an inflection point to accelerate growth and monetization:
- Poised to accelerate retailer monetization with retailers seeing 14x Return on Ad Spend and in the early stages of monetizing the more than 7,800 brands on the Leafly platform
- Projected revenue of approximately $43 million in 2021E and $65 million in 2022E, representing ~52% annual growth with gross margins of ~88% as Leafly further penetrates current markets and capitalizes on its strong position in the newly legalized East Coast
Key Transaction Terms
At closing, the combined company is expected to have an implied, fully diluted enterprise value of approximately $385 million and equity value of approximately $532 million, subject to any redemptions by Merida stockholders. Existing Leafly shareholders will roll 100% of their existing stake in Leafly and, upon closing, are expected to own approximately 72% of the combined company on a pro forma basis, assuming the company receives 100% of the proceeds currently held in trust.
The transaction is expected to generate proceeds of up to $161.5 million, subject to any redemptions by Merida stockholders. This follows and is inclusive of Leafly's recent $31.5 million capital raise led by leading cannabis-focused investors, including Merida Capital Holdings, Delta Emerald Ventures, SOJE Capital, and Leafly's existing shareholder base. The proceeds of the capital raise and transaction provide Leafly with substantial capital to enhance its advertising and platform technology, expand its marketplace, and execute customer acquisition initiatives.
The proposed transaction has been unanimously approved by the boards of directors of both Leafly and Merida, and is expected to close in the 4th quarter of 2021, subject to customary closing conditions.
Additional information about the transaction, including a copy of the investor presentation that will be used by the parties to describe the transaction during the conference call discussed below, will be provided in a Current Report on Form 8-K to be filed by Merida with the Securities and Exchange Commission (SEC) and available at www.sec.gov.
Oppenheimer & Co. served as exclusive financial advisor to Leafly, while Weil, Gotshal & Manges LLP served as Leafly's legal advisor. EarlyBirdCapital, Inc. served as financial advisor to Merida. Craig-Hallum Capital Group LLC, JMP Securities, LLC, and The Benchmark Company, LLC are serving as capital markets advisors to Merida. Graubard Miller acted as Merida's legal advisor.