Grindr Inc. (GRND) is taking a hit today after its board decided to pump the brakes on what could have been a major corporate shakeup. The dating app company's shares fell as investors processed news that the special committee overseeing a potential take-private deal has walked away from negotiations with the company's largest shareholders.
The Deal That Wasn't
Here's what went down: Ray Zage and James Lu, who together own more than 60% of Grindr's outstanding common stock, pitched a proposal to take the company private at $18 per share in cash. They submitted the offer to the special committee back in late October, presumably thinking their majority stake would give them some leverage.
But the special committee wasn't buying it—literally. After consulting with independent financial and legal advisors, the board requested more information about the financing behind the proposal. Apparently, what they heard (or didn't hear) wasn't reassuring enough.
Why the Board Said No
"After careful consideration, the Special Committee has unanimously determined that further discussions with the Proposing Shareholders with respect to the Proposal are not in the best interests of the Company or its shareholders at this time," said Chad Cohen, who chairs the special committee.
The committee pointed to uncertainty around whether Zage and Lu could actually secure the financing to pull off the deal. Cohen added that the board remains confident in Grindr's ability to create value on its own, especially given the company's strong third-quarter performance.
Market Reaction
Investors didn't love the news. Shares of Grindr were trading down 8.74% at $12.63 at the time of publication—a notable drop from that proposed $18 buyout price that now seems increasingly unlikely to materialize.
