Huddle has finally confirmed that it will be selling its business to a US private equity firm, which will now act as a majority shareholder.
Rumours began circulating last month when a blog post announced Turn/River had acquired a majority stake in the company, only for the post to be deleted almost immediately.
However, Huddle has now confirmed the deal, although no prices were mentioned. It is thought Turn/River is acquiring the UK-based collaboration platform for $89 million (68 million), according to a letter from Huddle to employees seen by Business Insider, a fraction of the $250 to $350 million it was valued at during the last funding round.
"Today, I'm delighted to officially announce that Turn/River Capital, will become our majority shareholder," said Huddle CEO Morten Brgger in a post published late last month. "We selected Turn/River to be our partner because of their strong track record in accelerating growth in companies like Huddle.
"I believe that our combined expertise will enable us to grow even faster within our core UK and US Government, and Professional Services markets; as well as initiating growth in new industries, with many new and exciting use cases."
Huddle has said that existing shareholders, including Dag Ventures, Eden Ventures, Hermes GPE, Icon Ventures, Matrix Partners and Zouk, will continued to operate as minority shareholders.
The company has struggled to remain profitable over the past year, revealing in April that it needed to raise $5 million or secure a buyer to appease its bank.
A letter delivered to employees in August reportedly revealed that only "preferred shareholders", such as management and early investors, would benefit from the Turn/River deal, while ordinary shareholders would receive just $100.
09/08/2017: Huddle 'is being bought by a US private equity firm'
Collaboration startup Huddle is reportedly selling its business to a San Francisco-based private equity firm, following months of financial struggles.
The software company, known for its collaboration platform that competes directly with the likes of Slack and Dropbox, was first founded in the UK in 2006 and has since become the defacto tool for some government departments. It also received numerous awards over the years, including Emerging Star of the Year in 2013, and has been held up as a star of the UK tech industry.
However, the company has struggled financially in recent months, quietly revealing in April that it would need to secure $5 million in funding, or secure a buyer, in order to appease its bank.
It appears it has since found a buyer in the form of Turn/River, which is securing the company for $89 million (£68 million), according to Business Insider. That's a fraction of the $250 to $300 million (£192 to £231 million) it was valued at during a previous funding round, when it managed to raise $89.2 million (£70 million).
Huddle declined to comment on the news when approached by Cloud Pro, however, a recently deleted blog post from CEO Morten Brøgger, seen by Business Insider, revealed that Turn/River had become a majority shareholder.
A letter was also reportedly issued to employees and investors on Monday, informing them that Turn/River would be acquiring the company's shares. It also stated that shares would be acquired under a "drag along" covenant, meaning that Turn/River, as majority shareholder, is able to force other minority shareholders to accept the acquisition.
Only preferred shareholders, such as early investors and management, would profit from the takeover, and that 'ordinary' shareholders would receive just $100 each from preferred shareholders.
Co-founders Alastair Mitchell and Andy McLoughlin stepped down from the company in 2015, being replaced by current CEO Morten Brogger. The company has since been in talks about a potential IPO, however those talks been repeatedly put on hold as the company tried to expand its growth internationally.
Cloud Pro will update this story if Huddle issues a formal statement on the deal, or if Turn/River responds to our request for comment.
