TORONTO, March 3, 2020 /CNW/ - PRESS RELEASE - SLANG Worldwide Inc., a global cannabis consumer packaged goods company with a robust portfolio of popular brands, has announced that it has entered into an acquisition agreement dated March 2, 2020 to acquire Cultivate Brands Corp.
Cultivate is a privately-owned company with a portfolio of brands and other intellectual property which are complementary to SLANG's portfolio. Its assets include extraction equipment and other machinery which SLANG intends to use within its network, cash of approximately CAD $4.5 million, and a strategic investment in a company within the supply chain. Cultivate is not currently consuming any cash in its operations.
The acquisition is expected to further strengthen SLANG's position in Oregon, which the company has identified as a core market for growth in 2020, due to its status as one of the most mature recreational markets in the United States. SLANG's O.penVAPE Craft RESERVE and Bakked Dabaratus products are strong performers in the state, and the company recently announced a strategic partnership in Oregon with Cookies, a third-party brand that the company expects to launch in Q2 2020. The Oregon market had retail sales of $810M USD during 2019 and grew 27% year over year as of December 2019 (per BDS Analytics).
The acquisition is structured as an all-stock transaction in which SLANG will issue a non-material amount of common shares in exchange for all the issued and outstanding shares of Cultivate. The majority of the SLANG Shares issued pursuant to the acquisition will be subject to a lock-up period with rolling expiration dates.
"We are pleased to execute a deal that contributes brands, IP, equipment, and capital to the already robust SLANG portfolio and balance sheet," said SLANG CEO Peter Miller. "The acquisition of Cultivate will provide a unique opportunity to generate value in several ways including new production assets, supply chain efficiencies and potential new products. This acquisition is consistent with our disciplined growth strategy and our focus on capital efficiency."
"We are pleased to align with a leading cannabis CPG company like SLANG, with its proven capability to develop and grow brands," said Mihalis Belantis, founder of Cultivate. "This transaction offers significant potential upside to our investors, as well as an opportunity to leverage and commercialize the foundational work we completed during the start-up phase of our business."
The acquisition will be completed by way of three-cornered amalgamation and is anticipated to close in April 2020. Closing of the acquisition is subject to the satisfaction or waiver of customary closing conditions, including the receipt of the approval of the shareholders of Cultivate and applicable regulatory approvals.