NEW YORK - Kidpik Corp. (NASDAQ: PIK), an online children's clothing subscription service, and Nina Footwear Corp., a brand known for women's and children's dress shoes, have announced a definitive merger agreement that will result in the formation of Nina Holdings Corp. The all-stock transaction was unanimously approved by a special committee of independent Kidpik directors, with CEO Ezra Dabah abstaining due to his majority ownership in both companies.
Upon completion of the merger, expected in the third quarter of 2024, Nina Footwear stockholders will own 80% of the outstanding common stock of Kidpik. Ezra Dabah, who is also the CEO of Nina Footwear, and his family will continue to control approximately 76.8% of the combined company's voting shares. The merger is anticipated to bolster Kidpik's revenue, cash flow, and balance sheet while significantly increasing shareholder value.
Dabah expressed his enthusiasm for fulfilling his late father-in-law's wish to make Nina a public company, particularly as the family business approaches its 70th anniversary. He outlined growth plans, including brand and category extensions, international expansion, and leveraging Nina Footwear's extensive archive.
An important factor in the merger's approval was the expectation that Kidpik will retain its significant net operating loss carryforwards, estimated at around $38 million, which are not expected to trigger a change of control under Nasdaq rules.
Kidpik will not see a change in its officers or directors as a result of the merger, which will be executed through a reverse subsidiary merger intended to be a tax-free reorganization. The transaction is subject to customary closing conditions, including stockholder approvals from both companies.
InvestingPro Insights
As Kidpik Corp. (NASDAQ: PIK) gears up for its merger with Nina Footwear Corp., a glance at the company's financial health and stock performance through InvestingPro data provides investors with a clearer picture. Kidpik's market capitalization stands at a modest $8.68 million, reflecting the size and valuation of the company in the market. Despite a challenging revenue trend with a -8.2% decline over the last twelve months as of Q1 2023, the company maintains an impressive gross profit margin of nearly 60%, which points to a strong ability to control costs relative to its sales.
Investors may find Kidpik's recent stock performance particularly noteworthy. The company has seen a significant return over the last week, with a 30.95% increase, and an even more remarkable surge over the last month, with a 150.41% increase in stock price. This volatility is indicative of a highly reactive market sentiment and could be a point of interest for those looking to capitalize on short-term movements.
InvestingPro Tips highlight Kidpik's high shareholder yield and gross profit margins as key strengths, while also noting the company's challenges, such as its struggle to achieve profitability over the last twelve months. The company's liquid assets exceeding short-term obligations is a positive sign for its immediate financial stability. For those seeking a deeper dive into Kidpik's financials and stock performance, InvestingPro offers additional insights. Currently, there are 13 more InvestingPro Tips available, which can be accessed on the platform for a thorough analysis. Investors interested in leveraging these insights can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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