Aug 12 - California weed supplier BGP Acquisition is in talks with blank check company HERBL to go public at a valuation of about $600 million, sources familiar with the matter said. One of several U.S. weed companies tapping funds in anticipation of potential federal reforms.
Santa-Barbara, California-based HERBL has seen its previous value cut in recent weeks to between $450 million and $500 million from over $630 million in the original agreement reached with BGP around June, sources said.
That would translate to an equity valuation of around $600 million, down from about $800 million in the previous deal, they added.
BGP, a private equity company formed by former Goldman Sachs banker Ruth Epstein, has been trying to raise roughly $50 million from investors as part of a so-called public investment round, they added.
But it has been challenging for BGP to raise the money it needs to fund the deal at high valuation, source added, so deal terms have been renegotiated to make them more attractive to potential investors.
A PIPE is a funding round that typically goes hand-in-hand with a SPAC merger and helps provide necessary funding for such deals.
By merging with BGP, HERBL's shares will be listed in the NEO exchange in Canada, a country in which it does not do business.
There is no certainty that BGP will eventually raise PIPE funding or completing the transaction, the sources cautioned, and HERBL could also decide to stay private.
HERBL declined to comment, while BGP did not respond to Reuters' requests. Sources declined to be identified because the discussions are confidential.