Kidpik Corporation (NASDAQ: PIK) shares are on an upward trajectory in the pre-market trading session today, displaying a notable surge of 33.33%, reaching $5.80. This rise counters a previous session decline of 4.81%, closing at $4.35. The company's engagement into a merger agreement is the cause of the spike.

The privately owned company Nina Footwear Corporation, which specializes in women's and children's formal footwear and accessories, and Kidpik (PIK) have announced a definitive merger agreement. The Boards of Directors of both firms have approved the all-stock deal.

The merged company will do business as Nina Holdings Corp. after the transaction. As per the agreement, owners of Nina Footwear will receive common stock from Kidpik, meaning that after the close of the purchase, they will control eighty percent of Kidpik's outstanding shares.

Mr. Ezra Dabah, CEO, Chairman, and majority stakeholder (67% beneficial owner) of Kidpik, also holds the CEO position at Nina Footwear. Mr. Dabah and his family possess around 79.3% ownership of Nina Footwear, with Mr. Dabah and extended family collectively owning 100% of the company. Post-merger, Mr. Dabah, his family, and spouse are expected to retain control over approximately 76.8% of the combined company's voting shares.

Kidpik's entry into the merger agreement received approval from its Board of Directors, based on a unanimous recommendation from a special committee comprising independent directors tasked with assessing strategic transactions involving Kidpik.

One significant aspect prompting the special committee's endorsement of the merger is Mr. Dabah's dual-company control, ensuring Kidpik's continued utilization of its substantial net operating loss (NOL) carryforwards post-merger (estimated at approximately $38 million). Furthermore, the transaction is not anticipated to trigger a change of control under Nasdaq regulations.

It is expected that Kidpik will acquire Nina Footwear through a reverse subsidiary merger, which will be tax-free. As a result of the merger, Kidpik will be rebranded as "Nina Holding Corp.", with its trading symbol changing to "NINA." As a result of the merger, Kidpik's executive leadership and board composition should not change.