Ithaca Holdings agreed to pay $6.05 a share in cash, valuing the dating app at $1.3 billion and 138% above its price before the talks surfaced. Blackstone affiliates and founder Whitney Wolfe Herd signed a written consent that supplies the required shareholder approval.
Bumble's sale to Ithaca Holdings won shareholder approval right after it was signed. Most of its shareholders were not asked.
Bumble said Tuesday it agreed to be acquired by Ithaca, a holding company for technology businesses, in an all-cash deal "valuing the Company at $1.3 billion." Holders of Class A stock will receive $6.05 a share, about 138% above the unaffected closing price on Oct. 9 and about 119% above the 30-day volume-weighted average price as of that date.
Affiliates of Blackstone and founder Whitney Wolfe Herd delivered a written consent of shareholders after the agreement was signed, providing the approval the deal requires. "No further action by holders of shares of Company Common Stock is required," the company said in a regulatory filing. Shareholders will receive an information statement rather than a proxy, and a Schedule 13E-3 going-private statement will also be filed.
The terms
The agreement has no financing condition. The buyer's side has lined up an equity commitment from Greenoaks, and Ithaca must place a $102 million termination fee in escrow by Oct. 19. The agreement's outside date is July 12, 2027. A portion of Ms. Wolfe Herd's shares will be exchanged for equity in the private company.
On closing, Ithaca co-chief executives Ravi Gupta and John Hegeman will become Bumble's co-chief executives, and Ms. Wolfe Herd will remain involved. A special committee of the board recommended the deal, and the board approved it with Ms. Wolfe Herd recused. Goldman Sachs and Morgan Stanley advised the committee. KKR Capital Markets is advising Ithaca on capital markets.
The price, in context
At $1.3 billion, the buyout is worth less than a tenth of the roughly $14 billion the market assigned Bumble after its 2021 debut.
The shares jumped about 56% on Tuesday to $5.935, about 1.9% below the offer price. That narrow gap suggests investors see a high likelihood the deal closes. Before the jump, Bumble's market value was about $582 million at Monday's close.
Approval by written consent
A written consent lets controlling holders approve a transaction without a shareholder meeting. For Bumble's public investors, that means the decision is made. Their choices are to sell in the market now, at a small discount, or wait for the cash at closing.
Bumble did not spell out whether its $1.3 billion valuation counts only the stock or also the company's borrowings.
Market implications
One reading is that public holders are getting a fair exit from a shrinking business. The premium is large, the deal has no financing condition and the spread to the offer is under 2%.
A second reading is that the structure leaves outside investors with a price set by insiders. The two holders with control both approved it, the founder is rolling equity into the buyer, and the valuation is a small fraction of the company's 2021 listing.
What to watch
The information statement and Schedule 13E-3 will disclose the background of the negotiations, the financial analyses behind the price and details of Ms. Wolfe Herd's rollover. The Oct. 19 escrow deadline is the first contractual milestone.