Long Blockchain Corp., the Farmingdale iced tea producer that in December refocused on the technology behind bitcoin, Tuesday announced a plan to merge with Stater Blockchain Limited, a financial technology company based in the United Kingdom.
Long Blockchain said it signed a letter of intent for an all-stock transaction in which Long Blockchain would form a subsidiary that would merge with Stater and Stater would become a wholly owned subsidiary of Long Blockchain.
Terms of the deal were not disclosed and Long Blockchain said “there can be no assurance” that the deal would be completed.
Shares of Long Blockchain fell 1.6 percent to close Tuesday at $4.94. The shares have more than doubled since the company’s December announcement that it was shifting focus from producing iced tea to blockchain technology.
The price of bitcoin tumbled 21.1 percent late Tuesday afternoon to $10,987, according to CoinDesk. The cryptocurrency has risen about 1,200 percent in the past 12 months and ignited the shares of companies dealing in cryptocurrencies and blockchain technology, including digital imaging company Eastman Kodak Co.
Long Blockchain would continue to be traded on the Nasdaq Capital Market after the transaction, according to the agreement.
“This merger would truly be a transformational moment for our business,” Long Blockchain chief executive Philip Thomas said in a statement. “Stater Blockchain brings a number of different assets to the table.”
A call seeking further comment from Thomas was not immediately returned.
Stater Blockchain’s subsidiary, Stater Global Markets, a brokerage regulated by the U.K.’s Financial Conduct Authority, would be included in the deal. Stater Global Markets deals in foreign exchange and digital currency futures.
“Our collective business will be unique in the investor space,” Ramy Soliman, chief executive of Stater Blockchain, said in a statement. “It gives a holistic value add for shareholders through accretive blockchain expertise and plans, as well as a regulated institutional brokerage through Stater Global Markets.”
If the parties reach an agreement to merge and regulators approve, they said they will seek approval from Long Blockchain shareholders in the second quarter of 2018 and close the deal “shortly thereafter.”
Long Blockchain said the deal would “complement” its plan to acquire 1,000 specialized computers used to “mine” bitcoin and their power-supply systems.
Bitcoin and other types of cryptocurrency are digital currencies that are not tied to a bank or government. The coins are created by users who “mine” them by lending computing power to verify other users’ transactions. They receive coins in exchange. A blockchain is a global running ledger of every transaction in the currency, but the technology is being developed for a variety of other uses, including stock transactions and health care.