Waitr’s $90m deal with cannabis dispensary software company goes up in smoke | Business
Waitr will no longer acquire a software company that specializes in serving cannabis dispensary retailers, but said it will continue to pursue a “potential business relationship” with the company.
The Lafayette-based delivery app’s parent company, Waitr Holdings Inc., announced in December that it had signed a non-binding letter of intent to buy Retail Innovation Labs Inc., which does business as Cova. Under the terms of the deal, Waitr would buy Cova for $90 million in cash and stock. Cova specializes in software that streamlines the marijuana dispensary management and compliance process. Nearly 2,100 dispensaries use Cova software for sales, inventory and compliance purposes.
At the time of the announcement of the deal, Carl Grimstad, CEO of Waitr and chairman of the board, said the total value of cannabis transactions processed on Cova was estimated at $2.3 billion.
But in a filing Thursday with the Securities and Exchange Commission, Waitr said the two parties had “mutually agreed” to increase the acquisition. The filing did not give a reason for the deal’s collapse.
Waitr said he would look at ways to provide Cova customers “access to third parties that provide payment processing solutions.”
“(Waitr) believes that such an arrangement may be mutually beneficial and will allow both parties to continue to execute their respective business strategies without affecting a business combination,” the filing with the SEC said. “These discussions remain preliminary and there can be no assurance that a definitive agreement regarding this agreement will be reached or consummated in the short term or at all.”
The exact future of Waitr’s marijuana dealings is not entirely clear. Waitr announced last year that it would partner with Flow Payments to create a legal delivery platform for cannabis dispensaries. It completed its purchase of Flow Payments and two other companies – ProMerchant and Cape Cod Merchant Services – in August 2021 to strengthen its payment processing platforms.
Waitr’s SEC filing says the company wants to continue expanding its delivery offerings, though it doesn’t specifically mention cannabis.
Grimstad said the company has invested in production and engineering staff and made additions to the technology management team, which should benefit Waitr as it plans to expand delivery services.
A spokesperson for Waitr did not immediately return a request for comment Friday on the status of the company’s marijuana delivery business.
Waitr also announced on Thursday that Pouyan Salehi had chosen to step down from the company’s board. Salehi, a serial tech entrepreneur, joined the board after Waitr bought BiteSquad in 2018.
The company’s filing with the SEC says Salehi is leaving on good terms. His term will end after Waitr’s shareholders’ meeting in June.
In January, Waitr announced that its stock price had been too low for too long, putting the company at risk of being delisted from Nasqad. Waitr has until July to raise his price. Its stock price closed at 46 cents on Friday.
Waitr announced on Friday that it had revenue of $38.6 million in the fourth quarter of 2021, compared to $46.8 million for the same quarter in 2020. It recorded a net loss of $8.1 million. in the fourth quarter of 2021 after posting a net profit of $2.6 million for the same period a year earlier.