ContextLogic Agrees to Sell Wish Assets to Qoo10 for US$173 Million
ContextLogic, the parent company of discount online retailer Wish, has reached an agreement to sell its assets and liabilities, including Wish, to Singaporean e-commerce company Qoo10 for US$173 million. The deal, which was confirmed on Monday, will see ContextLogic sell its assets for US$6.50 per share in cash. The company will retain its status as an entity holding the proceeds from the sale, as well as US$2.7 billion of net operating loss carryforwards, a tax-related asset that can be used for future tax reduction.
In addition to the sale, ContextLogic is exploring ways to monetize its tax assets, including potentially partnering with a financial sponsor and combining with a tax-inefficient business. The decision comes as ContextLogic, operating as Wish, has been experiencing financial losses due to tough competition from other e-commerce platforms such as Shein.
The sale of Wish to Qoo10 is seen as the culmination of a strategic review that ContextLogic initiated in November. The company has faced criticism from activist investor Cannell Capital for its consistently negative results and significant decline in market value.
Shares of ContextLogic saw a significant increase, rising by up to 44 percent in premarket trading in New York on Monday. The company had a market value of approximately US$108 million, with shares closing at US$4.50 on February 9th. However, this represents a significant drop from its US$14 billion market value when it went public in 2020.
JPMorgan Chase & Co is advising ContextLogic on the transaction, while Jefferies Financial Group is working with Qoo10.
The agreement between ContextLogic and Qoo10 marks a strategic move for both companies, as they aim to position themselves more competitively in the e-commerce market. The sale of Wish will provide ContextLogic with an opportunity to focus on its tax assets and explore new avenues for growth, while Qoo10 will gain a prominent player in the online retail sector.
As the deal moves forward, both companies will likely face challenges and opportunities in integrating their operations and expanding their customer base. The successful completion of the sale will pave the way for a new chapter in the growth and development of both ContextLogic and Qoo10 in the global e-commerce landscape.
