(Reuters) -Two Grindr board members, part of an investor group that owns more than 60% of the company, have proposed to take one of the world's most recognized dating platforms for the LGBTQIA+ community private for about $3.46 billion.
Shares of the company closed up nearly 19% on Friday.
A deal would give board members Ray Zage and James Lu greater control of the popular LGBTQIA+ dating platform with millions of users in more than 190 countries, at a time when online dating companies are under immense pressure to rekindle growth.
Grindr, along with industry leaders such as Tinder-parent Match Group and Bumble has wrestled with slowing user additions and rising criticism of "swiping fatigue," as younger users experiment with AI-driven and niche matchmaking alternatives.
Zage and Lu originally acquired Grindr in June 2020, and led the company's public listing in November 2022.
The consortium has secured significant expressions of interest to participate in financing, including multiple highly confident letters and contributions of equity, and is confident these will be sufficient to fund the acquisition, the shareholders said.
"We are strong believers in the long-term outlook for the company — I have been a consistent buyer of shares in Grindr since listing, buying over $200 million of shares on the public market and am also willing to contribute additional equity to this deal," Zage said.
The company's stock has been volatile since going public in 2022, trading below its debut levels for much of the last year.
BID LIKELY TO SUCCEED
The offer of $18 per share represents a 51% premium over the stock price on October 10, the day prior to when shareholders first informed the company of their intention to explore a going-private transaction, they said.
The proposal is slightly below expectations, but investors likely had concerns around growth, which would be difficult to allay without a few sustained quarters of good performance, analysts at Raymond James said in a note.
While Grindr would offer valuable assets for other players in the online dating industry, peers are more likely to focus on improving their existing businesses rather than turning to acquisitions, the analysts added.
"We view today's bid as the most likely to cross the finish line."
Last week, Grindr's board established a special committee of "disinterested and independent directors" to evaluate any definitive proposals, including committed financing, presented to the company.
The committee is reviewing Friday's unsolicited offer, Grindr said.
(Reporting by Kritika Lamba in Bengaluru and Arsheeya Bajwa; Editing by Alan Barona)
