Pre-market, AeroClean Technologies Inc. (AERC) shares fell -14.31% to $5.09 in pre-market trading. After skyrocketing in the last session after a merger deal, the stock appears to be correcting. Trading 64.5 million shares compared to a 50-day average volume of 3.73 million shares, AERC closed Tuesday’s session at $5.94, an 85.05% increase from the previous session.
What is the deal that AERC has entered into?
AeroClean (AERC) on Monday announced a definitive agreement with Molekule Inc to merge in an all-stock deal. In order to address the estimated $15 billion, rapidly growing global air purification market, the combined company will provide the widest range of proprietary and patented air purification devices that are FDA-cleared. Based on pro forma combined revenue estimates, AeroClean expects the combined company to generate approximately $45 million in revenue in FY 2022 and to have a solid balance sheet and strong liquidity profile.
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On a pro forma basis, AERC stockholders will own 50.5%, and Molekule stockholders will own 49.5%, of the outstanding common equity of the combined company under the terms of the Merger Agreement, which has been unanimously approved by the boards of directors of both companies. The merger is expected to take effect on a monthly basis.
Benefits that are both strategic and financial:
In the event of the merger, AeroClean and Molekule anticipate the following strategic and financial benefits:
- With the combination of the two companies, a new generation of IoT-enabled devices, as well as SaaS IAQ solutions, will be developed.
- Molekule Air Platform (MAP), the newly released business software that integrates IoT devices and indoor air quality solutions, will enable facility managers to provide clean indoor air across the enterprise through monitoring and device control subscriptions.
- As part of the combined company’s strategy, each company will market its products through the other’s existing sales and distribution channels, expanding into healthcare, government, hospitality, and education verticals.
- In an estimate of pro forma combined financials as of September 30, 2022, the combined company would have had approximately $30 million in cash and approximately $37 million in long-term debt, which is interest-only until April of 2024 and amortizing through April of 2027.
- By joining forces, the combined company will be well-positioned to take advantage of additional value-creating M&A opportunities in the IAQ and cleantech sectors.
What is the AERC’s fate?
After the merger is completed, AeroClean (AERC) will change its ticker symbol to Molekule, Inc. (Nasdaq: MKUL). With significant operations in Lakeland, Florida, and offices in San Francisco, California, the combined company will remain headquartered in Palm Beach Gardens, Florida.