ContextLogic Inc. (Nasdaq: WISH), the operator of ecommerce marketplace Wish, has agreed to sell off all of its operating assets to Qoo10, a competitor based in Singapore, for $173 million in cash, according to a filing with the SEC.
The purchase price is valued at $6.50 per share, a 44% premium on the company's Feb. 9 stock price.
Despite selling off all its assets, ContextLogic aims to continue on as a company, using the funds raised by the sale to make some as-yet-undetermined acquisition — just not in the ecommerce field. That will allow it, the company said, to take advantage of around $2.7 billion in net operating loss carryforwards that ContextLogic retained after selling its assets.
The IRS restricts companies' ability to use such loss provisions after an acquisition.
Context Logic is also exploring finding a financial sponsor to help it explore ways to extract value from these tax assets.
However, the company said in the filing that if it does not find a way to somehow monetize the operating losses, it will return all its capital to its shareholders.
“The board conducted a thorough review of strategic alternatives with the assistance of outside financial and legal advisors," said Chairman Tanzeen Syed in a press release. "We evaluated a variety of potential outcomes and determined that the proposed sale of our operating assets and liabilities, while preserving significant NOLs, represents the best path forward to maximize value for shareholders.”
ContextLogic was once a darling of Silicon Valley, valued at $14 billion at the time of its IPO, but has seen its share price fall precipitously over the years.
Last year the company had to do a 30-1 stock split to avoid delisting, while laying off 150 employees and decreasing its real estate holdings to cut down expenses.
