The strategic acquisition is due to close later this year.
US analytics firm Enova is looking to scoop up alternative lender OnDeck at a massive discount.
Enova announced that it planned to buy all outstanding shares in the lender in a cash and stock sale worth around $90m—for context, at the time of its IPO, OnDeck was valued at $1.5bn.
The $90m price tag reflects a 43.6 per cent premium on OnDeck’s 90-day weighted average price and a 90.4 per cent premium based on its closing price of just $0.73 on 27 July.
“Joining forces with Enova, a highly-respected and well-capitalized leader in online lending, and leveraging our combined scale and strengths, provides the best opportunity for our long-term success."
Founded in 2006, OnDeck has originated over $13bn in loans to more than 115,000 small businesses across 700 different industries.
David Fisher, CEO of Enova, added: "This strategic transaction, which brings together two FinTech leaders, is a great opportunity for customers, employees and shareholders of both companies.”
“Acquiring a premier online small business lender and its ODX bank platform, and welcoming its innovative and talented team to Enova, will increase our scale and resources, providing us with opportunities to accelerate growth in our increasingly diversified portfolio as we continue to execute on our strategy to create long-term value for all of our stakeholders."
The transaction has been unanimously proposed by both boards and is expected to close later this year.
OnDeck has been on rocky water for some time, in its Q1 earning call in April, OnDeck reported that 42 per cent of its loan book was in some stage of delinquency and posted a net loss of $59m.
OnDeck’s Q2 report, which was released yesterday, signalled a slight change, with a $2.2m profit on originations and the rate of delinquency had reduced slightly to just under 39.5 per cent.
The report also detailed that the lender had severely reduced lending, dishing out just over $65,000 in June 2020, compared to just under $600,000 in the year previous.
OnDeck also reduced its US employee numbers by roughly 20 per cent in July.
Following news of the sale breaking, a New York-based law firm, Halper Sadeh LLP, has begun investigating whether the sale of OnDeck to Enova is on the best interest of OnDeck’s current shareholders.
Shareholders in the firm will only be receiving $0.12 per share in cash and 0.092 shares of Enova common stock for every OnDeck share held.
When the sale is finalised later this year, OnDeck shareholders will own 16.7 per cent of the joint entity, compared to Enova shareholders owning roughly 83.3 per cent.