Firms say deal allows economy of scale to grow revenue and address new markets
AeroClean To Merge With AeroClean
Air purification firm AeroClean Technologies Inc (NASDAQ:AERC) said that it agreed to merge with private San Francisco firm Molekule Inc on Monday after the market closed.
AeroClean shares closed up eleven percent Monday before the news arrived, and the release lifted the shares 41% in after hours.
Molekule, founded in 2014, is an air purification company that uses proprietary Photo Electrochemical Oxidation (PECO) technology.
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AeroClean is changing its name to Molekule Inc and will trade with the NASDAQ:MKUL ticker, AERC shareholders will own 50.5% of the new entity.
AeroCleanChairman AOmin Khoury will become the nonexecutive chairman of the combined company. AeroClean Chief Executive Officer Jason DiBona and Chief Financial Officer Ryan Tyler will retain the titles at the new company.
The merger is expected to close in the first half of 2023.
The new Molekule will have an installed unit base of over 350,000 air purification units, allowing it to grow revenue and launch a software-as-a-service (SaaS) business. The companies said the SaaS solution would enable building managers to monitor and control building at the individual room level, on an enterprisewide basis.
Management noted that the combined entity is expected to generate around $45 million over FY22 on a combined pro forma basis.
Additionally, based on 30-Sep-22 figures, the combined entity would have about $30 million in cash on the balance sheet and around $37 million in long-term debt. Management expects double-digit organic revenue growth and expanding gross margins.
AeroClean Chairman Amin Khoury said in a prepared statement, “We believe the combined company will be able to generate significant, organic revenue growth, particularly in the B2B channel, as we begin the rollout of our SaaS IAQ solutions. In addition, we expect to be well-positioned to pursue additional strategic acquisitions.”
AERC sports a 91.51 Institutional Accumulation Score from Fintel's platform analysis, ranking it in the top one percent of companies screened.
Thirty-three institutions collectively own 1.9 million AeroClean shares. Armistice Capital, Marshall Wace, Citadel Advisors, George Capital and Jane Street Group are among the largest shareholders.
AeroClean featured recently at the top of Fintel's short squeeze leader board in July. An article on the story can be found here.
AERC has since fallen from the second spot down to the 59th position but has risen 43 ranks this week on the back of the sharp price rises.
The potential for a short squeeze has fallen drastically as short interest decreased by 38% over the last month, with short interest currently only at 5.92% of the float (according to Nasdaq).
Article by Ben Ward, Fintel
