NEW YORK, Oct. 11, 2018 /PRNewswire/ -- MTech
Acquisition Corp. (NASDAQ: MTEC) ("MTech"), the first US-listed
Special Purpose Acquisition Company focused on acquiring a business
ancillary to the cannabis industry, and MJ Freeway LLC ("MJ
Freeway"), a leading seed-to-sale technology provider and developer
of the cannabis industry's first enterprise resource planning
platform, announced today they have entered into a definitive
merger agreement. Following the consummation of the transaction,
MTech and MJ Freeway will become subsidiaries of a newly-formed
holding company ("Pubco") to be listed on The Nasdaq Stock Market.
Following the closing of the transaction, if there are no
redemptions by MTech shareholders in connection with the MTech
shareholder vote to approve the transaction, it is currently
anticipated that the combined entity will be debt free and have
over $60 million of balance sheet
cash to take advantage of strategic growth opportunities.
MJ Freeway is a seed-to-sale technology provider, with more than
30% of the global cannabis technology market based on management's
estimates. MJ Freeway has tracked more than $10 billion in sales for its clients in
Australia, Europe, South
America, New Zealand,
Africa, Canada, and the
United States in 29 states and the District of Columbia. MJ Freeway's software,
MJ Platform®, includes compliance tracking of cannabis from
seed-to-sale, as well as enterprise scale business management tools
across the entire supply chain. In addition, its Leaf Data Systems®
software solution enables governments to track cannabis plants from
seed-to-sale to help ensure patient, public and product safety.
"We built MJ Freeway to be the technology infrastructure for the
cannabis industry," said Jessica
Billingsley, Co-Founder & CEO of MJ Freeway. "With
access to public capital markets and additional balance sheet
strength as a result of this transaction, MJ Freeway will
accelerate its growth and broaden its product offering as we strive
to meet the ever-expanding demands of a highly complex and heavily
regulated industry."
Current MJ Freeway investor and Senior Strategic Advisor to the
Board, Roger McNamee, added,
"Cannabis companies that want to be leaders are adopting MJ
Platform because I believe it is the only product with the
technical foundation to support multi-line and multi-location
operations. MJ Freeway prepares customers to manage high growth and
complexity as the industry transitions from local to global
scale. MJ Freeway's merger with MTech will enable a smart
growth strategy to capitalize on the industry's continuing
growth."
Scott Sozio, Chief Executive
Officer of MTech, commented, "We believe technology solutions that
empower operators to efficiently and compliantly run their
business, with tools that track the full vertical from cultivation
to consumer, are critical to the industry's long-term
success. We believe MJ Freeway provides the most robust
seed-to-sale software technology available today, positioning the
company for enormous growth as the legalization of cannabis expands
throughout the country and the world. We are excited for
MTech to be able to invest in MJ Freeway at what we believe to be a
very attractive valuation."
"This merger will prove valuable over the long-term. Not only
will it allow us to grow our current lines of business, it will
accelerate our dominant market share in the cannabis SaaS space and
also allow the company to make strategic acquisitions and expand
its reach into related industries," noted Emery Huang, Senior Partner of Batu Capital, a
MJ Freeway investor, and a current board member of MJ Freeway.
Summary of Transaction
Under the terms of the merger agreement, each of MTech and MJ
Freeway will merge with newly formed subsidiaries of Pubco, which
itself is a newly formed subsidiary of MTech. As a result of
such mergers, MJ Freeway equityholders will receive new shares of
Pubco and MTech security holders will exchange their securities of
MTech for securities of Pubco. The shares of Pubco common
stock to be issued to the MJ Freeway equity holders will have an
aggregate value equal to Seventy Million
U.S. Dollars ($70,000,000),
subject to adjustment for net working capital and indebtedness of
MJ Freeway (as determined in accordance with the merger agreement),
with each share of Pubco common stock valued at $10.16 per share. Cash proceeds released
from MTech's trust account, which trust account currently has
approximately $58 million in cash,
after any shareholder redemptions and payment of transaction
expenses and other MTech liabilities, shall remain with the
combined company. MJ Freeway equityholders are rolling 100%
of their equity into the combined entity.
The transaction has been unanimously approved by the boards of
both MTech and MJ Freeway. Completion of the transaction is
subject to approval by equityholders of each company and certain
other conditions. The transaction is currently anticipated to
close by early 2019.
For additional information about the business combination, see
MTech's Current Report on Form 8-K (including the investor
presentation included as an exhibit thereto), which will be filed
promptly with the Securities and Exchange Commission and shall be
available at the SEC's website at www.sec.gov.
Ellenoff Grossman & Schole LLP is acting as legal advisors
to MTech. EarlyBirdCapital, Inc. is acting as financial
advisors to MTech. Graubard Miller is acting as legal
advisors to MJ Freeway.
MTech and MJ Freeway intend to hold a conference call in the
near future to discuss the transaction and will issue a separate
release to announce when the call is scheduled.
About MJ Freeway
MJ Freeway® is the largest global cannabis technology company
having tracked more than $10 billion
in sales with clients in Australia, Europe, South
America, New Zealand,
Africa, Canada, and the
United States in 29 states and the District of Columbia. Founded in 2010 by
technologists creating tech specifically for cannabis businesses,
MJ Freeway's tracking software includes inventory control and grow
management applications to streamline workflow and increase
efficiency. MJ Freeway's Leaf Data Systems software solution
enables governments to track cannabis plants from seed-to-sale and
ensure patient, public, and product safety. MJ Freeway also offers
a complete suite of professional consulting services for cannabis
businesses. For more information, visit mjfreeway.com.
About MTech Acquisition Corp.
MTech Acquisition Corp. is a blank check company formed for the
purpose of entering into a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization or
other similar business combination with one or more businesses or
entities. MTech's efforts to identify a prospective target
business will not be limited to a particular industry or geographic
region, although MTech intends to focus its search on companies
ancillary to the cannabis industry, with a particular sector focus
that includes compliance, business intelligence, brand development
and media.
MTech is led by Executive Chairman Steven Van Dyke and Chief Executive Officer
Scott Sozio.
Forward Looking Statements
Certain statements made in this release are "forward looking
statements" within the meaning of the "safe harbor" provisions of
the United States Private Securities Litigation Reform Act of 1995.
When used in this press release, the words "estimates,"
"projected," "expects," "anticipates," "forecasts," "plans,"
"intends," "believes," "seeks," "may," "will," "should," "future,"
"propose" and variations of these words or similar expressions (or
the negative versions of such words or expressions) are intended to
identify forward-looking statements. These forward-looking
statements are not guarantees of future performance, conditions or
results, and involve a number of known and unknown risks,
uncertainties, assumptions and other important factors, many of
which are outside MTech's, MJ Freeway's or Pubco's control, that
could cause actual results or outcomes to differ materially from
those discussed in the forward-looking statements. Important
factors, among others, that may affect actual results or outcomes
include: the inability to obtain MTech stockholder approval of the
business combination, the inability to complete the transaction
contemplated by the merger agreement because of failure of closing
conditions or other reasons; the inability to recognize the
anticipated benefits of the proposed business combination, which
may be affected by, among other things, the amount of cash
available following any redemptions by MTech stockholders; the
ability of Pubco to meet the listing standards of The Nasdaq Stock
Market following the consummation of the transactions contemplated
by the merger agreement; costs related to the proposed business
combination; MJ Freeway's ability to manage growth; the reaction of
MJ Freeway's customers and suppliers to the business combination;
Pubco's ability to identify and integrate other future
acquisitions; rising costs adversely affecting MJ Freeway's
profitability; adverse changes to the legal environment for the
cannabis industry; and general economic and market conditions
impacting demand for MJ Freeway's products and services. See
the risk factors disclosed in the S-4/proxy statement for the
business combination for additional risks associated with the
business combination. None of MTech, Pubco or MJ Freeway
undertakes any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
Additional Information About the Transaction and Where to
Find It
For additional information on the proposed transaction, see
MTech's Current Report on Form 8-K, which will be filed
promptly.
The proposed transaction will be submitted to shareholders of
MTech for their approval. In connection with the proposed
business combination, Pubco will file with the SEC a registration
statement on Form S-4 for the Pubco securities to be issued to
MTech and MJ Freeway security holders at the closing of the
business combination, which registration statement will contain
preliminary and definitive proxy statements of MTech in connection
with a special meeting of the stockholders of MTech to consider and
vote on the business combination and related matters. Pubco
and MTech will mail the definitive registration statement on Form
S-4 containing the definitive proxy statement and other relevant
documents to its stockholders in connection with the meeting.
Investors and security holders of MTech and MJ Freeway are advised
to read, when available, the draft of the registration statement,
the preliminary proxy statement, and amendments thereto, and the
definitive registration statement and proxy statement, which will
contain important information about the proposed business
combination and the parties to it. The registration statement and
definitive proxy statement will be mailed to stockholders of MTech
as of a record date to be established for voting on the proposed
business combination. Stockholders will also be able to
obtain copies of the registration statement and proxy statement,
without charge, once available, at the SEC's website at www.sec.gov
or by directing a request to: MTech Acquisition Corp., 10124
Foxhurst Court, Orlando, Florida,
32836, attention: Chief Executive Officer.
Participants in the Solicitation
MTech, Pubco, MJ Freeway, and their respective directors,
executive officers and other members of their management and
employees, under SEC rules, may be deemed to be participants in the
solicitation of proxies of MTech stockholders in connection with
the proposed business combination. Investors and security
holders may obtain more detailed information regarding the names,
affiliations and interests of MTech's directors in the final
prospectus for MTech's initial public offering dated as of
January 29, 2018 and that was filed
with the SEC on January 30, 2018, and
well as in any annual reports on Form 10-K that may be filed with
the SEC. Additional information regarding the participants in
the proxy solicitation and a description of their direct and
indirect interests will be contained in the proxy statement when it
becomes available.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
Media Contact:
Jon Goldberg
KCSA Strategic Communications
Tel. 212.896.1282
Email: jgoldberg@kcsa.com
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SOURCE MTech Acquisition Corp.
