HempFusion, a Los Angeles-based hemp extract company, has announced it will acquire its California-based competitor Sagely Naturals for $25 million in a cash deal. Founded in 2014, Sagely has been a leading producer of cannabidiol (CBD) infused topical products, boasting the highest-rated CBD salve on Amazon.
Sagely Naturals is a major player in the market of CBD oils and topicals. Their flagship brand, Sagely Botanicals, has a broad product line of CBD products, ranging from their flagship CBD oil to CBD lip balms. This deal is an important step in the right direction for HempFusion, which has already established itself as a major player in the hemp-derived cannabidiol (CBD) market.
HempFusion signs definitive agreement to acquire Sagely NaturalsCBD brand
DENVER, 25. May 2021-(BUSINESS WIRE)-HempFusion Wellness Inc. (TSX:CBD.U) (US:CBDHF) (FWB:8OO) (HempFusion or the Company), a leading provider of premium probiotic supplements and CBD products, is pleased to announce that it has entered into a definitive agreement to acquire a 100% interest in Sagely Enterprises, Inc. (Sagely Naturals), a leading provider of high-quality CBD products, distributed en masse in more than 14,000 retail outlets nationwide. Founded in 2015 by Kerrigan Behrens and Kaley Nicol, Sagely Naturals is the largest CBD-based brand for women. Since its inception, the brand’s mission has been to naturally enrich the medicine cabinet with high-quality, affordable products that help women feel their best. Sagely Naturals products are available at major retailers nationwide and are sold at department stores such as CVS, Rite Aid, Albertsons, Sprouts, Nordstrom and many other regional independent food and natural products stores, as well as at sagelynaturals.com. The company’s products are available in more than 14,000 retail outlets. Sagely Naturals remains the number one player in the CBD topical segment with 23% market share in the drugstore channel and 13.8% in the multiple outlet (MULO) channel (according to IRI). Including oral products, Sagely Naturals is the third largest CBD brand and one of the few brands to show consistent growth across all time periods over the past 52 weeks (according to IRI and MULO). Of the top 20 selling CBD SKUs in MULO, Sagely Naturals has five, with Extra Strength Relief & Recovery Cream being the top selling SKU in the medicine chain. Sagely Naturals’ product development is based on consumer insights in every way, allowing the company to meet consumer needs in an accessible and trusted way and build a large and loyal community around the brand. Sagely Naturals has also attracted the attention of prominent celebrities such as Cameron Diaz, Zoe Saldana and Molly Sims, both as consumers and investors. Strategic motive
- Net sales in 2020 will exceed $4.19 million; and combined with the completion of the APCNA Holdings LLC (Apothecanna) deal, HempFusion’s sales will more than triple in 2020, with significant expansion expected for 2021 and beyond.
- Immediate distribution to over 14,000 additional stores, significantly expanding HempFusion’s distribution base.
- Ability to introduce CBD products for oral consumption in over 14,000 Sagely Naturals stores.
- The complementary, but not directly competing, product offerings provide significant opportunities for cross-platforming across the two companies’ respective distribution channels.
- Improving the performance of the topical product line, while enabling near-term expansion into oral products, using HempFusion’s patented formulations.
- HempFusion’s significant investment in regulatory compliance will help strengthen Sagely Naturals’ leading position in the CBD industry.
- Sagely Naturals is included in the HempFusion New Foods submission to the UK Food Safety Authority for future expansion in Europe.
- Sagely Naturals’ leadership will bring operational excellence to the HempFusion family of brands, including best-in-class marketing, proven innovation and profitable customer and channel relationships.
The completion of the acquisition of Sagely Naturals will immediately generate significant value for shareholders. By tripling its sales by 2020 (with the closure of Apothecanna), expanding to over 15,000 stores, expanding its distribution strategy to six channels, bringing together some of the best executives in the industry, and amassing over 75 incredible, best-selling SKUs, HempFusion is in its strongest position yet.
Jason Mitchell, n.d., co-founder and CEO, HempFusion
We expect the Company’s combined pro forma balance sheet to experience significant growth over our historical financial performance and solidify our leading position in the CBD industry, paving the way for tremendous growth in 2021 and 2022. Enabling people to do more of what they love has always been at the heart of our mission at Sagely Naturals. HempFusion takes the right approach to the industry and has the resources to help us significantly grow our business, increase our market share and expand beyond our U.S. stronghold into international territories, said Kerrigan Behrens, co-founder and CEO of Sagely Naturals. Quality and consumer safety are of utmost importance to our brand, and in this regard, Dr. Jason Mitchell and his team are the market leaders in the CBD category. We are very excited to join the HempFusion team.
Kayleigh Nicol, Co-Founder and Executive Director of Sagely Naturals
Conditions of the Agreement Pursuant to a Merger Agreement and Plan dated 24. May 2021 (the Merger Agreement) among HempFusion, HempFusion Merger Sub 2, Inc, a wholly owned subsidiary of HempFusion, the State of Delaware (HF Merge Co), Sagely Naturals and KBKN Equityholder Representative LLC, representing the shareholders of Sagely Naturals (the Vendors), will merge HF Merge Co with Sagely Naturals, with Sagely Naturals remaining a wholly-owned subsidiary of HempFusion, for an initial consideration of $25.The Transaction will result in total consideration of approximately $1.000,000 (Initial consideration), consisting of $2,000,000 in cash (subject to adjustment for cash and working capital of Sagely Naturals) and $23,000.000 in common shares of the Corporation (HempFusion Shares), issued at a notional price per HempFusion Share of approximately $1021, being the volume weighted average trading price (VWAP) of the HempFusion Shares on the Toronto Stock Exchange (TSX) during the 30 trading days immediately preceding the 24th day following the Closing Date. The Transaction will occur on May 1, 2021 (the Transaction). In addition, the sellers may be entitled to a payout of up to $5,000,000 (the Payout) subject to Sagely Naturals achieving certain revenue targets (with a minimum revenue threshold of $6,020,000) within twelve months of the closing (the Closing) of the Transaction (the Payout Period), with 40% of the Payout to be paid in shares of HempFusion common stock (HempFusion Shares) and the balance in cash. The number of HempFusion Shares, if any, to be issued pursuant to the payment will be calculated based on a notional price equal to the greater of (i) the VWAP of the HempFusion Shares on the TSX during the 30 trading days immediately preceding the 12-month anniversary of the Closing or (ii) $1.25 per HempFusion Share (the Minimum Price), provided that HempFusion issues HempFusion Shares (other than those specified pursuant to certain agreements in the Merger Agreement) at a price per HempFusion Share (the Issue Price) at any time during the period commencing on the date of the Merger Agreement and ending 30 days after the end of the Award Period that is less than the Lower Frontier Price, the Lower Frontier Price will automatically be adjusted downward to that Issue Price and the number of HempFusion Shares for which the Bonus is granted will be adjusted accordingly. All shares of HempFusion common stock issued in connection with the merger agreement are subject to contractual resale restrictions, which will be lifted within 12 months of the closing as follows: (i) 33% will be released on the four-month anniversary of the closing, (ii) 33% will be released on the eight-month anniversary of the closing and (iii) the balance will be released on the twelve-month anniversary of the closing. The completion of the transaction is subject to a number of conditions set forth in the merger agreement, including (among others) the exercise of appraisal rights by the holders of up to 5% of Sagely Naturals’ outstanding shares, the receipt of TSX approval and certain other closing conditions customary for transactions of this nature. Upon completion of the transaction, Sagely Naturals will become a wholly owned subsidiary of HempFusion, and Kerrigan Behrens and Kaley Nicol will remain co-CEOs of Sagely Naturals. ABOUT HE DU CHAN À FUSION HempFusion is a leading CBD health and wellness company that harnesses the power of pure cannabis. HempFusion distributes its brands, including HempFusion, Probulin Probiotics, Biome Research and HF Labs, to approximately 4,000 retail locations in all 50 states and select countries. HempFusion’s diversified product portfolio, based on regulatory compliance and human safety, includes 48 titles, including tinctures, patented and FDA-listed OTC medications, physician and practitioner lines, and more. HempFusion focuses on research and development and has another 30 products in development. HempFusion is a board member of the US Hemp Roundtable, and its wholly owned subsidiary, Probulin Probiotics, is one of the fastest growing probiotic companies in the US, according to SPINs. HempFusion products with CBD are based on the patented Whole Food Hemp Complex™ and are available in stores or online at HempFusion www.hempfusion.com or www.probulin.com. Follow HempFusion on Twitter, Facebook and Instagram and Probulin on Twitter, Facebook and Instagram. Follow Sagely Naturals on Facebook and Instagram. Original press release Stay ahead of the crowd by subscribing to 420 Investor, the largest and most comprehensive subscription service for cannabis dealers and investors since 2013. New Cannabis Ventures is committed to gathering quality content and information about leading cannabis companies to help our readers filter through the noise and stay informed about the most important news in the field. Do you have sensitive information? Please contact us.