ContextLogic Inc. (d/b/a Wish) (NASDAQ: WISH) (“ContextLogic” or
the “Company”) today announced that its Board of Directors (the
“Board”) has unanimously approved an agreement to sell
substantially all of its operating assets and liabilities,
principally comprising its Wish ecommerce platform, to Qoo10, an
ecommerce platform operating localized online marketplaces in Asia,
for approximately $173 million in cash, subject to certain purchase
price adjustments. The purchase price represents approximately
$6.50 per share and an approximately 44% premium to ContextLogic’s
closing stock price on February 9, 2024, the last trading day prior
to announcing the transaction.
Following closing of the transaction, ContextLogic will have
limited operating expenses and a balance sheet that will be
debt-free, with net cash proceeds from the asset sale,
approximately $2.7 billion of Net Operating Loss (“NOL”)
carryforwards and certain retained assets. The Board intends to use
the proceeds from the transaction to help monetize its
NOLs. The Board also intends to explore the opportunity for a
financial sponsor to help ContextLogic realize the value of its tax
assets. If the ContextLogic Board does not identify opportunities
that will allow it to effectively monetize the value of its NOLs to
the benefit of shareholders, it intends to promptly return all
capital to shareholders.
Tanzeen Syed, Chairman of the Board, said, “The Board conducted
a thorough review of strategic alternatives with the assistance of
outside financial and legal advisors. We evaluated a variety of
potential outcomes and determined that the proposed sale of our
operating assets and liabilities, while preserving significant
NOLs, represents the best path forward to maximize value for
shareholders. We also believe there is a significant upside
potential to obtaining a long-term aligned capital partner that
would support future value creation.”
Syed continued, “The Board believes the transaction will
effectively reduce the cash burn in ContextLogic to near zero,
monetize its operating assets at the highest value possible and
preserve significant value for shareholders. At the same time, we
believe this is a compelling opportunity for shareholders to
directly benefit from the approximately $2.7 billion value of our
NOLs as profitable operations are targeted by the continuing
business.”
Joe Yan, ContextLogic CEO, said, “Integrating the Wish platform
into Qoo10 will create a true global cross-border ecommerce
platform to support the massive market demand. Upon close, we
expect the new Wish platform will have an improved customer
experience through increased product assortment and merchant
selection. And for our merchants, we will be able to offer fully
integrated logistical capabilities to deliver unmatched
cost-efficient services with high quality control and transparency.
I would like to thank all of our employees for their exceptional
work on behalf of Wish.”
Following the close of the transaction, the Wish brand and
platform will become a part of the Qoo10 family of businesses. Wish
merchants are expected to benefit from an integrated platform that
will unlock new cross border ecommerce opportunities, while Wish
users are expected to benefit from an ever greater selection of
goods at competitive prices.
Qoo10 CEO and Founder Young Bae Ku remarked, “Wish has
innovative technology that provides highly-entertaining,
personalized shopping experiences for its users while serving as
one of the largest global e-commerce platforms. By combining our
operating expertise and Wish’s technology and data science
capabilities, we expect to drive greater success for merchants
while providing an even greater marketplace for consumers globally.
With the acquisition of Wish, Qoo10 and Wish will offer a
comprehensive platform for merchants, sellers, buyers, and
customers globally to realize the potential of a truly global
marketplace. With the strong commitment from Wish’s employees and
staff combined with the Qoo10 family group of companies, we are
well positioned to realize our long-stated goal of being a leading
cross-border, e-commerce marketplace.”
The Company expects to complete the transaction in the second
quarter of 2024, subject to the approval of ContextLogic’s
shareholders and other customary closing conditions. The
transaction is not subject to any financing contingency. As part of
the agreement, ContextLogic will begin trading under a new ticker
symbol within 30 days of the closing of the transaction.
Tax Benefits Preservation Plan
In order to protect the Company’s ability to use its substantial
NOLs in the future, the Board has also unanimously adopted a tax
benefits preservation plan (the “Plan”). Pursuant to the Plan, the
Company will issue, by means of a dividend, one preferred share
purchase right for each outstanding share of the Company’s Class A
common stock to stockholders of record at the close of business on
February 22, 2024. Stockholders are not required to take any action
to receive the rights. Initially, these rights will not be
exercisable and will trade with, and be represented by, the shares
of Class A common stock.
The Company intends to submit the Plan to a vote of its
stockholders at its 2024 annual meeting of stockholders, which is
expected to take place in the second quarter of 2024.
Under the Plan, the rights generally become exercisable only if
a person or group (an “acquiring person”) acquires beneficial
ownership of 4.9% or more of the outstanding shares of Class A
common stock in a transaction not approved by the Board. In that
situation, each holder of a right (other than the acquiring person,
whose rights will become void and will not be exercisable) will be
entitled to purchase, at the then-current exercise price,
additional shares of Class A common stock at a 50% discount. The
Board, at its option, may exchange each right (other than rights
owned by the acquiring person that have become void) in whole or in
part, at an exchange ratio of one share of Class A common stock per
outstanding right, subject to adjustment. Except as provided in the
Plan, the Board is entitled to redeem the rights at $0.001 per
right. If a person or group beneficially owns 4.9% or more of the
outstanding shares of Class A common stock prior to today’s
announcement of the Plan, then that person’s or group’s existing
ownership percentage will be grandfathered. However, grandfathered
shareholders will generally not be permitted to acquire any
additional shares.
Additional information regarding the Plan will be contained in a
Current Report on Form 8-K to be filed by the Company with the U.S.
Securities and Exchange Commission.
Advisors
J.P. Morgan Securities LLC is acting as financial advisor to the
Company and Sidley Austin LLP is acting as legal counsel.
Jefferies LLC is acting as financial advisor to Qoo10 and
Shearman & Sterling LLP is acting as legal counsel.
Conference Call
ContextLogic will host a conference call and webcast today at
9:00 AM ET / 6:00 AM PT to discuss the transaction. The conference
call can be accessed here:
https://event.on24.com/wcc/r/4498741/16DBD89DC0FB634C6CD079FCC6B9FFC4.
The call will include a Q&A session during which both the
Company’s analysts and shareholders may participate in the Q&A
portion. Shareholders can submit questions by visiting the webcast
link above.
About Wish
Founded in 2010 and headquartered in San Francisco, Wish is one
of the largest global ecommerce platforms, connecting millions of
value-conscious consumers in over 60 countries to thousands of
merchants around the world. Wish combines technology and data
science capabilities and an innovative discovery-based mobile
shopping experience to create a highly-visual, entertaining, and
personalized shopping experience for its users. For more
information about the company or to download the Wish mobile app,
visit Wish mobile app, visit www.wish.com or follow @Wish
on Facebook, Instagram and TikTok or @WishShopping on Twitter and
YouTube.
Additional Information and Where to Find It
In connection with the proposed acquisition of substantially all
of the assets of ContextLogic Inc., a Delaware corporation (the
“Company”), by Qoo10 Inc., a Delaware corporation (the “Buyer”),
other than the Company’s federal income tax net operating loss
carryforwards and certain other tax attributes, pursuant to the
terms of an Asset Purchase Agreement (the “Agreement”), dated
February 10, 2024, by and among the Company, the Buyer and Qoo10
PTE. Ltd., a Singapore private limited company and parent of the
Buyer (the “Parent”), the Company intends to file with the
Securities and Exchange Commission (the “SEC”) and furnish to the
Company’s stockholders a proxy statement, in both preliminary and
definitive form, and other relevant documents pertaining to the
transactions contemplated by the Agreement (the “Transactions”).
Stockholders of the Company are urged to read the definitive proxy
statement and other relevant documents carefully and in their
entirety when they become available because they will contain
important information about the Transactions. Stockholders of the
Company may obtain the proxy statement and other relevant documents
filed with the SEC (once they are available) free of charge at the
SEC’s website at www.sec.gov or by directing a request to
ContextLogic Inc., One Sansome Street, 33rd Floor, San Francisco,
California 94104, Attention: Ralph Fong.
Participants in the Solicitation
The directors, executive officers and certain other members of
management and employees of the Company are “participants” in the
solicitation of proxies from stockholders of the Company in favor
of the Transactions. Information regarding the persons who, under
the rules of the SEC, are participants in the solicitation of the
stockholders of the Company in connection with the Transactions,
including a description of their direct or indirect interests in
the Transaction, by security holdings or otherwise, will be set
forth in the proxy statement and the other relevant documents to be
filed by the Company with the SEC. Information regarding the
Company’s directors and executive officers, their ownership of
Company stock, and the Company’s transactions with related parties
is contained in the sections entitled “Directors, Executive
Officers, and Corporate Governance,” “Security Ownership of Certain
Beneficial Owners and Management,” and “Certain Relationships and
Related Party Transactions” in the Company’s definitive proxy
statement on Schedule 14A for the Company’s 2023 Annual Meeting of
Stockholders, which was filed with the SEC on March 9, 2023 (and
which is available at
https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001822250/000114036123010911/ny20006182x2_def14a.htm),
in the Company’s Current Report on Form 8-K filed with the SEC on
April 11, 2023 (and which is available at
https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001822250/000095017023012442/wish-20230410.htm),
and in the Company’s Current Report on Form 8-K filed with the SEC
on December 1, 2023 (and which is available at
https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001822250/000095017023067343/wish-20231129.htm).
To the extent holdings of Company securities by the directors and
executive officers of the Company have changed from the amounts of
securities of the Company held by such persons as reflected
therein, such changes have been or will be reflected on Statements
of Change in Ownership on Forms 3 or Forms 4 filed with the SEC.
These documents can be obtained free of charge from the sources
indicated in the previous section. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the proxy statement and other relevant
materials to be filed with the SEC when they become available.
Forward-Looking Statements
Except for historical information, all other information in this
communication consists of forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements, and related oral statements the
Company, the Parent or the Buyer may make, are subject to risks and
uncertainties that could cause actual results to differ materially
from those projected, anticipated or implied. For example, (1)
conditions to the closing of the Transactions may not be satisfied,
(2) the timing of completion of the Transactions is uncertain, (3)
the business of the Company may suffer as a result of uncertainty
surrounding the Transactions, (4) events, changes or other
circumstances could occur that could give rise to the termination
of the Agreement, (5) there are risks related to disruption of the
management’s attention from the ongoing business operations of the
Company due to the Transactions, (6) the announcement or pendency
of the Transactions could affect the relationships of the Company
with its clients, operating results and business generally,
including on the ability of the Company to retain employees, (7)
the outcome of any legal proceedings initiated against the Company,
the Parent or the Buyer following the announcement of the
Transactions could adversely affect the Company, the Parent or the
Buyer, including the ability of each to consummate the
Transactions, and (8) the Company may be adversely affected by
other economic, business, and/or competitive factors, as well as
management’s response to any of the aforementioned factors.
The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements that are included herein and elsewhere,
including the risk factors included in the Company’s most recent
Annual Report on Form 10-K and Quarterly Report on Form 10-Q and
other documents of the Company on file with the SEC. Neither the
Company nor the Parent or the Buyer undertakes any obligation to
update, correct or otherwise revise any forward-looking statements.
All subsequent written and oral forward-looking statements
attributable to the Company, the Parent or the Buyer and/or any
person acting on behalf of any of them are expressly qualified in
their entirety by this paragraph.
Contacts
Investor Relations: Ralph Fong, Wish
ir@wish.com
Media: Carys Comerford-Green, Wish
press@wish.com
Nick Lamplough / Dan Moore / Jack Kelleher, Collected
Strategies WISH-CS@collectedstrategies.com
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