Investors in crypto app Ziglu are braced for heavy losses after investment platform Robinhood dropped its valuation of the UK-based company by nearly 60%.
Robinhood agreed to buy Ziglu for $170 million back in April but now, due to a “shift in market conditions” and citing recent failures, including Celsius, Voyager, and BlockFi, the Menlo Park firm has slashed its offer to just $72.5 million.
This translates to a share price of $34.04, a significant drop from the $58.12 reached during Ziglu’s last funding round in November last year.
According to Ziglu founder Mark Hipperson, if Robinhood does indeed pull out of the previously-agreed deal, the company would be left facing an “extremely challenging market, and undercapitalized for the period ahead,” (our emphasis).
“The board has spent significant time in discussion with Robinhood’s CEO and executive team negotiating and improving the terms of their revised offer,” said Hipperson (via AltFi).
“Based on these discussions and other considerations, we believe the revised proposal…is the best and only reasonable path forward for the company.”
Robinhood’s Ziglu deal isn’t the only one to hit the skids
Robinhood’s Ziglu deal isn’t the only high-profile takeover to have stalled in recent weeks.
Earlier this month, Mike Novogratz’s Galaxy Digital pulled out of a $1.2 billion deal to buy crypto custody firm BitGo. Galaxy claimed BitGo had failed to produce the required financial paperwork.
However, BitGo doesn’t plan to take the snub lying down and says it will seek a $100 million “breakup fee” from Galaxy by way of compensation.
“The attempt by Mike Novogratz and Galaxy Digital to blame the termination on BitGo is absurd,” BitGo’s lawyer said in a press release.
“BitGo has honored its obligations thus far, including the delivery of its audited financials. It is public knowledge that Galaxy reported a $550 million loss this past quarter, that its stock is performing poorly, and that both Galaxy and Mr. Novogratz have been distracted by the Luna fiasco. (our emphasis).
“Either Galaxy owes BitGo a $100 million termination fee as promised or it has been acting in bad faith and faces damages of that much or more.”
Galaxy told CoinDesk that these claims are unfounded and that it will defend itself “vigorously.”