On-demand food ordering and delivery company Waitr Holdings Inc. (NASDAQ:WTRH) is looking to acquire a cannabis-focused point of sale inventory and compliance software business Retail Innovation Labs Inc., which is doing business as COVA.
What Happened
The Lafayette, Louisiana-based company said Friday that it has entered into a non-binding letter of intent to buy Cova for a proposed purchase price of $90 million in cash and stock.
Why It Matters
Once acquired, Cova POSsolution will be "symbiotic" with Waitr's recently acquired Cape Payments business, Carl Grimstad, CEO and chairman of Waitr's board said then highlighted that "annualized gross merchandise value of the cannabis transactions processed on the Cova platform of approximately $2.3 billion, based on recent performance."
Considering that Cova's software solution is being used by roughly 2,000 dispensaries in Canada and the US, retailers will have access to regulatory compliant payment solutions.
Moreover, "when and if provincial regulations in Canada and federal and state regulations in the United States evolve, potentially the ability to offer delivery services as well." Grimstad continued.
He also believes that an adaptation of the Cova POS solution for restaurants is also possible, offering Waitr's restaurant base an integrated solution for in-house and food delivery services.
Gary Cohen, Cova's CEO said that the combination of the company's leading retail cannabis technology with Waitr's on-demand delivery logistics network and expertise in payments is a "perfect match."
"Waitr and Cova share the same values – we both put the retailer first and believe that nobody should get between them and their customers," Cohen added. "This should further enable the dispensary retailers utilizing Cova software to grow and thrive."
What's Next
However, Waitr said there could be no assurance that entry into the LOI will result in a definitive agreement or, if a definitive agreement is reached, the acquisition will close on the terms described above or at all.
In addition, legal, regulatory, business and financial diligence will need to be satisfactorily completed by both the company and Cova as well as other customary conditions and approvals.
WTRH Price Action
Waitr's shares traded 3.9269% lower at $0.8416 per share at the time of writing on Friday.
Photo: Courtesy of Gabriel Crismariu on Unsplash
