Overstock’s tZERO Is Looking for a Buyer

The company is exploring a number of options, including a SPAC merger, said tZERO VP of Investor Relations Michael Mougias.

Jun 1, 2021 at 8:09 p.m. UTC
Updated Sep 14, 2021 at 1:04 p.m. UTC

Tokenized securities venue tZERO is shopping itself around, in search of the right buyer to take the trading platform to the next level, two people familiar with the plans told CoinDesk. 

One of the sources, from a tZERO partner company, said: “They've been open to selling it for a while.” 

The alternative trading system (ATS) is the crown jewel of Overstock’s Medici Ventures. Medici’s stable of blockchain projects was brought under the management of VC firm Pelion Venture Partners earlier this year, part of Overstock’s plan to eventually exit its blockchain-related investments.

According to tZERO VP of Investor Relations Michael Mougias, the goal is not to sell tZERO, but rather to find the right strategic partners. However, this could mean going down a number of possible routes including taking tZERO public via a special purpose acquisition company (SPAC), Mougias added.  

“There could be strategic buyers that perhaps want to take control of the business, or take up a majority stake in the business, which would result in a change of control, and that would technically be a buyer,” Mougias said in an interview.

A capital raise for tZERO is under way and non-disclosure agreements (NDAs) are being signed with VCs and traditional private equity firms, tZERO CEO Saum Noursalehi said during a webinar last month. 

“Overstock has been a great incubator for tZERO, but it is now time for us to seek outside, strategic capital to accelerate growth and adoption,” Noursalehi said in an email when reached by CoinDesk, adding:

“To that end, we recently engaged a major global investment bank to run a process for tZERO with the goal of not only raising growth capital but finding partners that can expedite bringing assets to our unique secondary market platform for digital securities.”

Long road

Overstock’s visionary, albeit controversial, former CEO Patrick Byrne deserves credit for being among the earliest supporters of cryptocurrency and blockchain technology. The e-commerce site became the first publicly traded company to accept bitcoin payments through a partnership with Coinbase back in 2014.

Staying ahead of the game, it became a personal mission of Byrne’s to build a fully transparent exchange designed to trade tokenized stock with instant settlement times. He resigned from the company in August 2019.

Over the course of 2020, the tZERO ATS onboarded and commenced trading of Overstock’s digital preferred dividend (OSTKO) and the St. Regis Aspen digital security (ASPD). It also signed a tokenization agreement with Tynton Capital, a technology-focused investment fund.

Most recently, tZERO signed three firms – OmniValley, Trellis Platform and Wunderfund –  to use the security token trading platform.

Noursalehi said forming a partnership with an entity with deep private-company relationships will meaningfully increase the volume of high-quality, new issuers engaging with tZERO. 

“We are already in discussions with several companies that fit this profile,” he said.

DISCLOSURE

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