Why Bill Ackman Says This Company Could Be The Next Berkshire Hathaway

WeCommerce Holdings Ltd WECMF has announced a definitive agreement to combine with Tiny in a merger deal that is expected to create a profitable new technology holding company.

What Happened? On Monday, WeCommerce announced a combination with Tiny in an all-stock deal executed via a three-cornered amalgamation under British Columbia's Business Corporations Act.

Tiny will amalgamate with SubCo to form the new company Alamco, which will be wholly owned by WeCommerce. WeCommerce will acquire all of the outstanding shares of Tiny through Amalco and will issue approximately 146.4 million WeCommerce shares to Tiny investors to complete the deal.

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Tiny is a technology holding company founded by Andrew Wilkinson and Chris Sparling that has acquired more than 30 companies since 2016. Tiny founded WeCommerce and remains its largest investor.

The combined company will take the name Tiny Ltd. and Wilkinson and Sparling will serve as co-CEOs.

Why It's Important: The combined company will be unique among technology holding companies because of WeCommerce's long track record of acquiring profitable technology companies, generating organic revenue growth and producing free cash flow used to fund future acquisitions without raising capital.

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In fact, hedge fund investor and Pershing Square Holdings Ltd PSHZF CEO Bill Ackman said Monday that he sees a lot of similarities between the way Wilkinson and Sparling have run Tiny and the way legendary Wall Street value investors Warren Buffett and Charlie Munger have run Berkshire Hathaway, Inc. (NYSE: BRK-A) (NYSE: BRK-B).

"I have always considered Andrew and Chris to be the Warren and Charlie of the technology investment world. They are outstanding operators and value investors, and I could not be more delighted that they have decided to go all-in and merge Tiny, which represents substantially all of their assets, with WeCommerce," Ackman said.

Ackman holds a 15.4% stake in WeCommerce via his Table Holdings.

Sparling said the deal is a great outcome for all parties.

"The combined company will have substantially more resources, scale and growth potential for many decades to come," he said in a statement. 

Benzinga's Take: WeCommerce trades on the public market in Canada and the OTC market in the U.S. Comparisons to Buffett and Munger are certainly high praise for Wilkinson and Sparling, but the two tech investors still have a lot to prove before they can begin to fill those shoes.

Bill Ackman illustration by Gonzalo Lanzilotta for Benzinga.