Shares of Grindr (GRND), the dating app tailored for LGBTQ+ people, tumbled as much as 14% on Monday morning. This happened after the company announced it had terminated the acquisition talks with its largest stakeholders, who had sought to take the Tinder (PC:TINDR) rival private in a $3.46 billion deal.
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Grindr said it ended talks due to “continued uncertainty” about how board chair James Lu and billionaire Raymond Zage will finance the buyout. Both investors own over 60% of the dating network and had offered to take the dating app private for $18 per share.
Grindr Ends Shareholders’ Take-Private Bid
The announcement comes about a month after Grindr’s filing with the U.S. securities regulator showed that Lu and Zage had formally submitted their offer to buy out the existing shares they do not already own. The document had indicated that they would fund the acquisition with a combination of equity and debt financing.
However, a special committee of independent directors established by Grindr could not get “satisfactory information about definitive financing” from both investors.
The two board members acquired Grindr in 2020 from its previous Chinese owners in a $608 million deal. Grindr became a public company in 2022 through a special purpose acquisition company (SPAC) merger, valued at $2.1 billion.
Grindr Expresses Confidence in Dating App Business
Media reports have previously indicated that the largest shareholders’ decision to completely take over the company came after a lender reportedly sold off GRND shares that the investors used as collateral for a loan. This situation reportedly forced both investors into “a precarious personal financial position.”
Meanwhile, the end of the talks comes as Grindr recently posted solid third-quarter earnings at a time rivals such as Bumble (BMBL) are struggling to sustain and grow their user bases.
“The Special Committee remains confident in the company’s ability to create significant value for all shareholders as the management team executes its long-term strategic plan, as demonstrated by the company’s outstanding performance in its most recent third-quarter financial results,” said Special Committee Chair Chad Cohen.
Is Grindr a Good Stock to Buy?
On Wall Street, Grindr’s shares continue to enjoy a Strong Buy consensus rating from analysts. This is based on four Buys issued by analysts over the past three months.
Moreover, the average GRND price target of $22 indicates approximately 77% upside potential from the current level. However, year-to-date, the shares have plunged more than 30%.
