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DALLAS - Blackboxstocks Inc. (NASDAQ: BLBX), a fintech and social media platform whose stock has surged over 57% year-to-date according to InvestingPro data, announced today its agreement to acquire REalloys Inc., a company specializing in rare earth element production. The merger is set to position REalloys as a leading integrated mine-to-magnet producer in North America, with a focus on supplying rare earth magnets and alloys for U.S. national defense stockpiles.
The transaction details reveal that upon completion, Blackbox and REalloys stockholders will own approximately 7.3% and 92.7%, respectively, of the combined company’s common stock. This is based on an initial valuation of REalloys at $400 million, significantly larger than Blackbox’s current market capitalization of $12.21 million. InvestingPro analysis indicates the stock is currently undervalued, with 8 additional exclusive insights available to subscribers. Blackbox stockholders will also receive Contingent Value Rights (CVRs), related to potential proceeds from the sale of Blackbox’s current fintech operations within 24 months after the merger.
David Argyle, CEO of REalloys, is set to become the CEO of the merged entity, while Gust Kepler will continue as CEO of Blackbox.io, Inc., a subsidiary for the company’s existing fintech operations. The board of directors for the combined company will be composed of five members from REalloys and one from Blackbox management.
REalloys’ strategic asset, the Hoidas Lake deposit in Saskatchewan, Canada, is noted for its high-grade rare earth elements critical to various sectors, including defense and advanced technologies. The company aims to reduce U.S. reliance on foreign suppliers by establishing a secure supply chain for these materials.
The merger is anticipated to close in the second quarter of 2025, subject to customary closing conditions, including approvals from regulators, lenders, and stockholders. Legal counsel for the transaction is provided by Winstead PC for Blackbox and Haynes and Boone, LLP for REalloys, with Palladium Capital Group, LLC acting as the exclusive financial advisor.
This strategic move is expected to fortify North America’s position in the rare earth production sector and contribute to the country’s national defense and technological advancements. While Blackbox currently operates with moderate debt levels and faces short-term liquidity challenges according to InvestingPro data, the merger could provide new growth opportunities for the combined entity.
For further details regarding the merger, Blackbox will file a Current Report on Form 8-K with the Securities and Exchange Commission on March 10, 2025. The information in this article is based on a press release statement.
In other recent news, Blackboxstocks Inc. announced several key developments that may interest investors. The company has completed a financing agreement involving senior debentures totaling $2.25 million, with an initial closing of $250,000. These debentures, carrying a 7.00% annual interest rate, are tied to a potential merger transaction, indicating strategic financial planning. Additionally, Blackboxstocks has increased its debenture offering to $2.85 million, according to a recent SEC filing, suggesting efforts to raise capital for future endeavors.
Furthermore, Blackboxstocks has faced compliance issues with Nasdaq listing requirements, particularly concerning annual stockholder meetings and board independence. The company has scheduled its 2024 annual meeting for February 7, 2025, to address the non-compliance regarding the annual meeting rule. In governance matters, shareholders recently approved the election of four directors and ratified the appointment of Victor Mokuolo CPA PLLC as the independent auditor for 2024.
Lastly, Blackboxstocks has secured financing of up to $2 million in anticipation of a potential merger, with the initial debentures set to mature upon reaching a definitive merger agreement. These financial moves and compliance efforts reflect Blackboxstocks’ strategic actions to navigate current challenges and potential growth opportunities.
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