Hollister Biosciences Inc., a diversified cannabis branding company, has entered into a definitive agreement (the “Agreement”) on March 6, 2020 to acquire Venom Extracts ( “Venom”), one of Arizona’s premier extract brands and one of the state’s largest producers of award-winning medical cannabis distillate and related products. On February 25, 2020, the Company first announced a Letter of Intent to acquire Venom, including the following financial figures and terms.
For the year ended December 31, 2019, Venom Extracts reports having generated CDN$ 16.4 million in revenue and CDN$ 2.48 million in EBIDTA from its product line of Cannabis Concentrates, P.H.O Concentrates and Cartridges. 2019 Revenue and EBITDA for Venom Extracts are as reported by Management. Though Hollister believes the figures to be highly reliable, their audit will be part of the ongoing due diligence before closing.
The all stock purchase price is anticipated to be CDN$ 20,000,000, with 70% to be paid upfront and 30% to be paid upon milestone achievements related to revenue targets for Venom. The acquisition is expected to close by March 31, 2020 subject to normal course due diligence.
KEY TERMS OF THE AGREEMENT:
- The Company will acquire Venom Extracts for CDN$20,000,000 with such payment to be issued in Hollister common stock (the “Payment Shares”)
- The stock price will be determined based on the greater of:
- The 14-day VWAP (Volume Weighted Average Price) capped at $0.25 subsequent to announcing the transaction and $0.20
- Once the share price is established, 70% of the Payment Shares will be issued upon closing of the transaction, subject to hold periods
- The remaining 30% of the Payment Shares will be issued when and if the following milestones have been met on or prior to December 31st, 2021:
- 20% (of the total number of Payment Shares) will be issued when revenue of Venom Extracts reaches CDN$ 30,000,000 (calculated in accordance with IFRS from January 1, 2020).
- 10% (of the total number of Payment Shares) will be issued when revenue of Venom Extracts reaches CDN$ 40,000,000(calculated in accordance with IFRS from January 1, 2020).
“We are very pleased to have entered into a definitive agreement to complete this transformational acquisition”, shared Carl Saling, Founder and CEO of Hollister Biosciences, Inc. “Financially, we are bolting on substantial revenue and EBITDA, while strategically, this allows for the opportunity to bring Venom into the California marketplace and help scale Hollister’s existing operation. Likewise, it allows for the opportunity to introduce Hollister’s products into the Arizona and Nevada marketplaces to start with.”
“This is an exciting acquisition and we are happy to be taking this critical step toward closing”, shared Jacob Cohen, Founder of Venom Extracts. “This transaction represents the next step in ensuring the future growth of both Hollister and Venom. We are looking forward to increasing the geographic scope of our operation by expanding into the California marketplace through Hollister’s existing platform, as well as, exploring expansion of our existing product scope collectively.”
In association with the acquisition, Hollister will not be assuming any long-term debt, a new control position will be created and there is no change in Management, or the Board of Directors of Hollister being contemplated at this time. Finder’s fees will be payable in accordance with the policies of the Canadian Securities Exchange.