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Picture: BLOOMBERG
Picture: BLOOMBERG

New York — Gay dating app Grindr said on Monday it would go public through a merger with a blank-cheque acquisition firm — a deal that values it at $2.1bn and features Tiga Investments CEO Raymond Zage on both sides of the transaction.

Grindr said its existing shareholders would own 78% of the company after the merger, which comes two years after China’s Kunlun Tech Co divested it for $620m due to US national security concerns.

While Grindr did not disclose the identities of its existing shareholders, Reuters previously reported that Zage had a 41% stake in the consortium that acquired Grindr. A source familiar with the matter said on Monday that Zage continues to be an investor in Grindr.

Tiga Acquisition, the Singapore-based special purpose acquisition company (Spac) that will merge with Grindr, is controlled by Zage. Under the deal, Grindr will receive $284m in cash from Tiga and up to $100m in a forward purchase agreement.

Grindr and Tiga expect that their deal may require clearance from the committee on foreign investment in the US which scrutinises deals for potential national security risks, according to a copy of their merger agreement that was made public on Monday.

The committee ordered Kunlun to sell Grindr in 2019 over concerns that the personal data of US users could be accessed or exploited by China’s government.

It could not be learnt if the committee had a role in Grindr’s decision to explore a sale and merger with a Spac. A spokesperson for the US treasury department, that chairs the committee , did not respond to a request for comment.

Grindr CEO Jeff Bonforte and COO Rick Marini will step down and a search for Bonforte’s replacement is under way, a person familiar with the matter said on Monday.

Bonforte and Marini were part of investment firm Catapult Capital that competed against Lu and Zage to buy Grindr before they clinched an agreement to work together.

Atlanta Hawks co-owner Michael Gearon, another major shareholder who was part of the consortium that acquired Grindr two years ago, will continue to be invested in the company, the source said.

Grindr said in an investor presentation on Monday that it has 11-million monthly active users and that its revenue grew 30% last year.

The deal values Grindr at 27 times its adjusted 2021 earnings before interest, taxes, depreciation and amortisation (ebitda) of $77mn. By comparison, shares of dating app peers Match and Bumble are trading at 22 times and 25 times their 2021 ebitda, respectively, according to Refinitiv.

Reuters

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