MIAMI, FL - MGO Global Inc. (NASDAQ:MGOL), a lifestyle brand portfolio company, and Heidmar, Inc., a maritime services provider, announced today their agreement to merge, creating a combined entity that will operate under the Heidmar name. The deal is expected to close in the latter part of the third quarter of 2024, subject to customary closing conditions and approvals from MGO's shareholders.
Heidmar, celebrating its 40th anniversary, is recognized for its asset-light business model and comprehensive maritime services in the tanker and dry bulk industry. With a strong cash position and no debt, Heidmar reported a net income of $19.6 million for the fiscal year ending December 31, 2023. The company manages over 60 vessels and anticipates becoming a dividend-paying company following the closure of the transaction.
The business combination is structured through a new Marshall Islands holding company (PubCo), where both MGO and Heidmar will become wholly-owned subsidiaries. MGO shareholders will receive one common share of PubCo for each MGO common stock they own, with an implied fully diluted equity value of $18.0 million. Heidmar shareholders will exchange their common stock for $300 million in PubCo shares, subject to adjustments.
Moreover, an earnout of $30 million in PubCo shares is payable to Heidmar shareholders if certain financial targets are met for the fiscal year ending 2024. The transaction implies a significant premium to MGO's current stock price, with MGO's existing shareholders expected to own approximately 5.6% of PubCo post-transaction.
Maximiliano Ojeda, CEO of MGO, expressed confidence that the merger will capitalize on the global tanker shipping market's demands. Pankaj Khanna, CEO of Heidmar, highlighted the company's revenue growth and its role in the decarbonization of the shipping industry.
The boards of directors of both companies have unanimously approved the agreement. Details of the transaction will be available in a Form 8-K to be filed by MGO with the SEC.
Maxim Group LLC and Seaborne Capital Advisors are serving as financial advisors to MGO and Heidmar, respectively, with legal counsel provided by Sichenzia Ross Ference Carmel, LLP and Seward & Kissel LLP.
The information in this article is based on a press release statement.
InvestingPro Insights
As MGO Global Inc. (NASDAQ:MGOL) prepares to merge with Heidmar, Inc., investors are closely watching the financial metrics and market movements of MGOL. According to recent data from InvestingPro, MGOL holds a market capitalization of $9.16 million USD, reflecting the size of the company in the market.
Despite an impressive revenue growth over the last twelve months, with an increase of 502.06%, MGOL's operating income margin sits at a concerning -142.94%, indicating operational challenges.
Investors should note the volatility in MGOL's stock price; while the company has seen a strong return over the last month of 99.39%, it has experienced a significant drop of 15.11% in the past week alone. This aligns with the InvestingPro Tips, which highlight the stock's high price volatility and the recent big hit it has taken.
For those considering an investment in MGOL, it's important to consider both the risks and the potential for growth. MGOL's balance sheet shows that liquid assets exceed short-term obligations, which could provide some financial flexibility in the near term. However, the company's valuation implies a poor free cash flow yield, as suggested by another InvestingPro Tip.
For a deeper analysis and additional insights, interested parties can explore the complete set of 13 InvestingPro Tips available for MGOL at https://www.investing.com/pro/MGOL. For a limited time, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to valuable investment information that could inform decisions during this merger and beyond.
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