An offer was made to take the dating app private.
Grindr (NYSE:GRND) stock was rising on Friday, jumping some 21% higher to make it one of the day’s top gainers.
The catalyst for Grindr, a social networking and dating site for the LGBTQ+ community, is a move to take the company private.
In an SEC filing submitted October 24, Grindr Chairman James Fu Bin Lu and board member Raymond Zage, the CEO of Tiga Investments, proposed to buyout the firm and take it private.
Specifically, they proposed to acquire all outstanding shares of Grindr that they don’t already own for $18.00 per share. Lu and Zage are majority shareholders, owning about 60% of the company, reported Forbes.
According to the SEC filing, Lu and Zage will fund the acquisition through a combination of equity and debt financing.
If the deal goes through, Grindr, which went public in 2022, would be delisted from the New York Stock Exchange.
The news sent the stock soaring some 21% on Friday to $15.35 per share. It had surged as high as $16.13 per share in early trading on Friday.
Investors were buying in as the offer price of $18 per share is significantly higher than the share price. Thus, investors would expect to gain as the sale price promises significant upside, even over the current price of $15.35 per share.
Grindr stock has solid 3-year return
Grindr stock is down about 14% year-to-date, but it has a one-year return of 16% and a three-year annualized return of 14%.
Earlier this month, Semafor published an article saying Lu and Zage were in discussion with Fortress Investment Group to secure debt financing to acquire Grindr. This came after Temasek, an investment company that made personal loans to at least one of the two, “seized some of the underlying shares … and sold them,” reported Semafor, citing people familiar with the matter.
On Friday, securities law firm Bleichmar Fonti & Auld issued a release saying it was investigating Grindr board of directors and majority stockholders for potential breaches of their fiduciary duties to shareholders in connection with this take-private proposal.
In the most recent quarter, Grindr posted strong results, with revenue rising 27% to $104 million and net income of $16.6 million, up from a $22 million loss the same quarter a year ago. Both missed estimates by a slight margin but still showed strong growth.
Grindr stock is considered a consensus buy among analysts with a price target of $22.50, which suggests about 47% upside.
Grindr reports third quarter earnings on November 6.
