ContextLogic to Sell Wish eCommerce Platform to Qoo10
ContextLogic has announced an agreement to sell a significant portion of its operating assets and liabilities, including its eCommerce platform Wish, to Qoo10, an eCommerce platform operating in Asia.
The transaction is valued at approximately $173 million in cash, ContextLogic said in a Monday (Feb. 12) press release.
Following the completion of the transaction, ContextLogic will remain as a publicly listed entity, preserving approximately $2.7 billion of net operating losses (NOLs), according to the release. The company’s board is exploring the opportunity to partner with a financial sponsor to help monetize the value of its NOLs.
The decision to sell the operating assets and liabilities came after a comprehensive review of strategic alternatives by the ContextLogic board, the release said. The sale is seen as the best path forward to maximize value for shareholders while preserving the significant NOLs. The board believes that the transaction will effectively reduce the cash burn in ContextLogic and provide an opportunity for shareholders to directly benefit from the value of the NOLs.
The integration of Wish’s platform into Qoo10 is expected to create a global cross-border eCommerce platform that can cater to market demand, per the release. The new Wish platform is expected to offer an improved customer experience with increased product assortment and merchant selection. Additionally, merchants will benefit from fully integrated logistical capabilities and the opportunity to unlock new cross-border eCommerce opportunities.
The transaction is expected to be completed in the second quarter of 2024, subject to the approval of ContextLogic’s shareholders and other customary closing conditions, per the release. ContextLogic will begin trading under a new ticker symbol within 30 days of the closing of the transaction.
Wish reported in November that its revenues fell 52% in the third quarter compared to the same quarter a year earlier. The mobile eCommerce platform also reported a net loss of $80 million, which was lower than the $120 million net loss in the third quarter of 2022 because of a decline in operating expenses.
The platform also reported a 42% drop in total revenue during the previous quarter. At that time, the company blamed intensified competition and a challenging environment for the decline.
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