In a somewhat odd twist, an acquiring company that is on the verge of being delisted from the Nasdaq exchange saw its share price rise by as much as 10% Tuesday. Long Blockchain Corp. (NASDAQ: LBCC) announced this morning that it has acquired a 9.9% stake in a closely-held U.K.-based firm, Stater Blockchain.
Long Blockchain paid for the acquisition with 9.9% of its common stock, so now the two companies own equal shares in one another. The clever bit is that if the company can manage to hold onto today’s share price gain, it may overcome the $35 million market cap floor required by Nasdaq and retain its listing.
In mid-January, the two companies signed a letter of intent under which Long Blockchain would acquire Stater through a subsidiary, with Stater surviving as Long Blockchain’s wholly owned subsidiary. Stater Blockchain is currently a wholly owned subsidiary of Stater Global Markets, a U.K.-regulated brokerage that facilitates market access across multiple instruments including spot FX, digital currency futures and contracts for difference.
Long Blockchain began its publicly traded life as the Long Island Iced Tea Company but abandoned the beverage business in December to focus on blockchain technology. Its initial plan called for the purchase of 1,000 bitcoin mining computers, but that plan soon gave way to a merger with Stater Blockchain, a company “developing and deploying globally scalable blockchain technology solutions.”
Whatever. Recently appointed Long Blockchain CEO Shamyl Malik said of the Stater deal:
As the expiration date of the letter of intent approached, both parties agreed that a minority investment with dual board representation would allow us to immediately formalize our partnership while maintaining our respective autonomy. We are pleased to announce this strategic investment, which further demonstrates our shared commitment to building blockchain technologies.
Ramy Soliman, CEO of Stater Blockchain, noted:
We aim to provide value for shareholders through blockchain solutions, as well as a regulated institutional brokerage through Stater Global Markets. We believe this combination of fintech and brokerage is a compelling value proposition and we look forward to working with Long Blockchain to leverage our collective expertise.
Late Tuesday morning Long Blockchain shares traded at $2.97, up about 5.3% for the day. At that price, the company’s market cap is $35.115 million.