The American equity firm allegedly acquired the London-based startup for a fraction of its previously estimated $250m value
From staff layoffs to the company urgently seeking a fresh injection of capital in April, it’s no secret that Huddle, the enterprise-collaboration software startup, has had its fair share of worries. But it seems as if the firm may have turned a corner after being acquired by the American equity firm Turn/River.
The first indication of the deal was unveiled when Huddle’s CEO Morten Brøgger posted a blog on the startup’s website on Sunday. In the post, which has since been deleted, Brøgger announced that Turn/River would become the company’s majority shareholder. Huddle’s shareholders and employees were later informed about the deal on Monday when the company sent them a letter confirming the acquisition.
However, the letter also unveiled that the deal would include a so-called drag-along covenant or bring-along provision. This essentially means that a majority shareholder can force minority owners of stock to accept an acquisition and sell their shares. And not everyone who owns stock in Huddle will be treated the same: while preferred shareholders – like early investors and some parts of the management team – will see a pay out, common stockholders won’t be paid anything but will be be paid $100 (£77) each by the company in a gesture of goodwill.
Huddle has yet to reveal the value of the deal but sources have told Business Insider that Turn/River bought the startup for $89.2m, which is almost a third of the estimated value placed on it during its 2014 series D round. Back then the London- and San Francisco-based startup was thought to be worth between $250m and $300m.
But the reduced price is hardly surprising considering that Huddle seems to have been struggling for a while. The company laid off staff in 2015 after co-founders Alastair Mitchell and Andy McLoughlin stepped down. And in April this year Huddle sent documents to Companies House revealing that the startup had until the end of the month to either raise £5m or find a buyer or risk being unable to meet its financial obligations.
Nothing is ever certain in the world of startups and even though the deal may leave some shareholders disappointed, here’s hoping that the deal will enable Huddle to regain some of its lost market value.