Gabriella's Kitchen to Acquire Lulu's Chocolates

Published: May 17, 2019

Gabriella's Kitchen to Acquire Lulu's Chocolates

Gabriella’s Kitchen Inc. has entered into a letter agreement with Louise (Lulu) Sharpe, the founder and President of Raw Chocolate Alchemy LLC (d.b.a Lulu’s Chocolates) to acquire all of the issued and outstanding securities of Lulu’s Chocolates, including its wholly owned subsidiary, Lulu’s Medicinals LLC. Lulu’s Chocolate endeavours to blend gourmet with healthy, creating 100% organic, raw, vegan chocolate. Lulu’s sources its wild harvested, heirloom cacao from Ecuador and sweetens it with low glycemic coconut sugar.

Lulu’s CBD infused chocolates are sold in approximately 250 mainstream grocery stores and its traditional chocolates are sold in an additional 200 mainstream grocery stores across the United States, including Whole Foods Market in Northern California and Arizona. In addition, Lulu’s THC infused chocolates are sold in 35 dispensaries across California.

Margot Micallef, Founder and CEO of GABY, stated, “Lulu and her husband Zirque Bonner have built an impressive company which, like GABY, has a dual channel sales strategy, selling traditional chocolates and CBD infused chocolates into the mainstream grocery channel and THC infused chocolates into the cannabis licensed or regulated channel. Lulu and Zirque share similar values to those which guide GABY, namely, a desire to empower consumers to take control over the quality of their health and in so doing to change the world for the better. Lulu’s will form the foundation upon which we will build our CBD and THC chocolate and confectionary business” she concluded.

Lulu’s CBD and THC infused chocolates have won multiple awards at several High Times Cannabis Cups (an annual international cannabis festival and cannabis infused products competition) and have been favourably reviewed by such industry publications as: Leafly, New York Magazine, DOPE, and POPSUGAR.

GABY will purchase Lulu’s for US$1 million payable in common shares of GABY (“GABY Shares”). The shareholders of Lulu’s will be eligible to receive further performance-based equity compensation equal to 0.5 times the amount by which 2019 revenue exceeds 2018 revenue and 0.25 times the amount by which 2020 revenue exceeds the greater of 2018 and 2019 revenue. The GABY Shares to be issued on closing of the Transaction will be valued at the volume weighted average price (“VWAP”) of GABY Shares on the Canadian Securities Exchange (“CSE”) for the 5-day period ending on the date the Transaction is announced. The GABY Shares issued as part of the Transaction will be subject to a three-year escrow period with staged releases over the three year time frame. The GABY Shares to be issued as part of the performance-based compensation will be valued at the VWAP of GABY Shares on the CSE for the 5 consecutive trading day period calculated 30-days after the date the respective 2019 and 2020 consolidated audited financial statements for GABY are filed on SEDAR.

Lulu Sharpe, President of Lulu’s, stated “My husband Zirque and I have always known that alone we could only take Lulu’s so far. We knew we needed the consumer-packaged goods experience that a company like GABY offers as well as its access to capital and its deep experience in product innovation, growing brands and building consumer awareness to really launch Lulu’s into the stratosphere and make it a household name. We are grateful to have found GABY, a company that shares our values, appreciates the contribution we can make to developing the Lulu’s brand and which has the commitment and knowledge to make us a worldwide brand” she concluded.

On closing of the acquisition, GABY intends to appoint Lulu Sharpe as the Vice-President, Development of GABY’s Edibles and Confectionary Division reporting directly to Jamie Fay, the President and Chief Operating Officer of GABY.

“I am excited to have Lulu join the executive team at GABY and look forward to combining my experience as the former Senior Vice-President of Strategy & Operations at Mars Chocolate North America with Lulu’s experience to build the CBD and THC infused Chocolate and Confectionary Division of GABY into a national operation” said Mr. Fay. “With Lulu’s, we are redefining ‘chocolate’!” he concluded.