According to Forbes, billionaire Raymond Zage and James Lu have withdrawn their $3.5 billion buyout bid for Grindr after the company’s special committee stopped engagement over “continued uncertainty as to the financing for the proposal.” The duo, who own about 64% of the LGBTQ dating app, made their decision in a regulatory filing on Monday. Grindr’s management preferred remaining public since Wall Street analysts recently upgraded their price targets to between $21 and $26 per share, well above the $18 offered. The company’s shares actually rose 1.5% following the withdrawal announcement. Zage’s investment firm Tiga confirmed the proposal is “withdrawn with immediate effect,” though he intends to continue buying shares in the open market after previously purchasing over $200 million worth when the stock hit a one-year low.
Why Wall Street wasn’t buying it
Here’s the thing – when your own majority shareholders can’t convince the market their offer is fair, that tells you something. The stock actually went up when the buyout collapsed, which basically means investors thought the $18 per share offer was too low. And they’re probably right – with four brokerages putting targets between $21 and $26, that’s a 17-44% premium to what Zage and Lu were offering.
But the financing uncertainty is the real red flag. When you control 64% of a company and still can’t secure funding for the remaining 36%, that suggests either the deal structure was shaky or lenders had concerns about Grindr’s prospects. Given that Grindr’s net profit climbed 25% to $31 million last quarter and they have over 14 million monthly active users, the hesitation seems more about the buyers than the business itself.
What happens now?
So where does this leave Grindr? Basically back to square one, but with some interesting dynamics. Zage says he’ll keep buying shares in the open market, which means his stake could grow even larger. He’s also pushing for more shareholder returns through buybacks and potential dividends.
But here’s the tension – management wants to stay public while the largest shareholder clearly sees more value in taking it private. That creates a classic standoff. The company gets to continue its growth story publicly, but with a billionaire investor who fundamentally disagrees with that strategy and now has a very public failed buyout attempt hanging over the relationship.
Look, this isn’t just about ego – Zage’s wealth is heavily tied to Grindr, so he’s got skin in the game. His regulatory filing says he “looks forward to many years of continued growth,” but the question is whether he’ll try again with better financing or settle into being a frustrated majority owner. Either way, this drama isn’t over – it’s just entering a new phase.
