The acquisition and integration of these two businesses will establish Coinsquare as one of
Coinsquare is in the final stages of its approval to become
"Today is an exciting day for all of us at CoinSmart," said CoinSmart CEO
"This acquisition represents a monumental and exciting milestone for both companies and brings together two industry leading management teams." said Coinsquare, CEO
Key Transaction Benefits
- One of
Canada's Largest Crypto Asset Trading Platforms: combined company will have transacted over$10 billion in crypto transactions sinceJanuary 2018 and will have over$350 million in assets under custody, together with a diversified and regulated platform across trading, payments, asset management, and digital asset custody. - Acquisition of Cash and Shares with Upside to Shareholders: consideration payable to CoinSmart at closing of
$3 million in cash, and the issuance of 5,222,222 common shares of Coinsquare ("Coinsquare Shares"), with an aggregate deemed value of approximately$26,215,555 , plus the ability to receive up to approximately$20 million in additional cash consideration on the achievement of SmartPay business earn-out targets and 1,100,000 Coinsquare Shares on the achievement of over-the-counter ("OTC") business earn-out targets. It is further anticipated that CoinSmart will hold cash (or crypto assets) of approximately$10 million on completion of the Transaction. - Investment in
Canada's only Qualified Custodian for Digital Assets: backed by Coinsquare,Coinbase Ventures and other well-known financial institutions,Tetra Trust isCanada's only qualified custodian for digital assets, and represents significant potential upside for Coinsquare shareholders. - Exposure to Diversified Investment Portfolio: Coinsquare, through its subsidiary
Coinsquare Investments Ltd. , holds a diversified investment portfolio in assets, such as FRNT Financial (TSXV: FRNT) and twoBlockchange Ventures funds. - Management Team to Join Coinsquare: CoinSmart Co-Founders
Justin Hartzman ,Jeremy Koven , andMichael Koral , amongst others, will join Coinsquare.Justin Hartzman will join the Coinsquare Executive Team and CoinSmart will be entitled to a nominee to join the Coinsquare Board of Directors upon completion of the Transaction. - Voting Support by Senior Officers and Directors of ~45%: each of the directors and certain senior officers of CoinSmart have entered into support and voting agreements with Coinsquare pursuant to which they have agreed to vote in favour of the Transaction.
Transaction Details
Pursuant to the terms of the Purchase Agreement, Coinsquare will acquire all of the issued and outstanding shares of Simply Digital on a cash-free, debt-free basis.
The purchase price, which is subject to standard post-closing adjustments as set out in the Purchase Agreement, will be satisfied on closing by (i) the payment to CoinSmart of
Subject to the terms set forth in the Purchase Agreement, additional consideration will be payable to CoinSmart pursuant to the Transaction upon the achievement of certain revenue-based earn-out targets related to CoinSmart's SmartPay business and OTC trading business. Up to an additional
On completion of the Transaction, CoinSmart will hold approximately 12% of the issued and outstanding Coinsquare Shares. Coinsquare is a privately held company incorporated under the laws of
Under the terms of the Purchase Agreement, the Board may respond to an unsolicited bona fide written proposal that, having regard to all relevant terms and conditions of such proposal, constitutes or could reasonably be expected to constitute or lead to a Superior Proposal (as defined in the Purchase Agreement).
The Transaction will constitute the sale of all or substantially all of the undertaking of CoinSmart pursuant to the Business Corporations Act (
The management of CoinSmart will be employed by Coinsquare following the closing of the Transaction and will continue to play an active role in the ongoing and future business of Simply Digital (including the SmartPay business and the OTC business).
Board Recommendation
The Board has unanimously determined that the Transaction is in the best interests of CoinSmart. Accordingly, the Board approved the Purchase Agreement and recommends that Shareholders vote in favour of the resolution to approve the Transaction at the Meeting.
Each of the directors and certain senior officers of the Company, collectively holding approximately 45% of the issued and outstanding common shares of the Company, have entered into support and voting agreements with Coinsquare pursuant to which they have agreed to support and vote in favour of the Transaction. In making its determination, the Board considered, among other things, an opinion provided to the Board by
In connection with the Transaction, CoinSmart has engaged
Additional Information
Complete details of the terms and conditions of the Transaction are set out in the Purchase Agreement, which will be filed by CoinSmart under its profile on SEDAR at www.sedar.com.
In addition, further information regarding the Transaction will be contained in the management information circular in respect of the Meeting which will be filed on SEDAR at the time that it is mailed to shareholders. All shareholders are urged to read the information circular once it becomes available, as it will contain additional important information concerning the Transaction.
CoinSmart is a leading Canadian-headquartered crypto asset trading platform dedicated to providing customers with an intuitive way for buying and selling digital assets, like Bitcoin and Ethereum. CoinSmart is one of the few crypto asset trading platforms in
Founded in 2014, Coinsquare, a private company incorporated under the laws of
This news release contains "forward-looking information" which may include, but is not limited to, information with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Forward-looking information in this press release includes, among other things, statements and information concerning: the anticipated benefits of the completion of the Transaction; the opportunities available to the combined company on completion of the Transaction; the consideration payable to the Company pursuant to the Transaction, including potential additional consideration payable upon the achievement of specified earn-out targets; the Company's pro-forma ownership of Coinsquare following completion of the Transaction; membership of the Company nominee on the board of Coinsquare following the completion of the Transaction; the requirement for the Company to obtain shareholder approval of the Transaction; the anticipated timing of the Meeting; the parties' ability to satisfy closing conditions, including the receipt of necessary regulatory approvals; and the anticipated timing for completion of the Transaction.
Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the Company. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward looking information involves known and unknown risks, uncertainties and other risk factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such risks in respect of forward-looking information in this press release include: risks associated with the Transaction and with purchase and sale transactions generally, such as the failure to satisfy closing conditions contained in the Purchase Agreement, the failure to obtain shareholder or regulatory approvals, and the absence of material adverse changes or other events which may give the parties a basis on which to terminate the Purchase Agreement; and the risk that the Transaction may not close on the anticipated timeline, or at all. In addition there are business risks and uncertainties associated with the digital currency industry generally, including: adapting to technological change, new products and standards; increased competition that adversely affects business; additional competition from new or existing technologies that adversely affect business; software products and/or services may contain undetected errors or "bugs", vulnerabilities or defects; damage or failure of information technology; cybersecurity risks associated with data security and hacking; potential violations of applicable privacy laws; political, economic and other uncertainties in respect of digital currencies; and various other risks as set out in the annual information form of the Company dated
The Transaction cannot close until the required shareholder and regulatory approvals are obtained. There can be no assurance that the Transaction will be completed as proposed or at all. The Transaction could be modified, restructured or terminated. Investors are cautioned that, except as disclosed in the Purchase Agreement or management information circular to be delivered to shareholders in connection with the Transaction, copies of each of which are or will be filed under the Company's profile on SEDAR at www.sedar.com, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon.
SOURCE CoinSmart
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