Tuesday, September 27, 2022

New week, new deal for Always Pure Organics as it buys into the European market with £3m acquisition

Always Pure Organics (APO) has spent £3m on two Belgian cannabis companies, hot on the heels of its LOI with ST Brands, and its facilities expansion.

Only a week ago, US acquisitions company ST Brands announced its LOI to purchase APO, a Scotland and Manchester-based CBD wholesaler and manufacturer of white label CBD products, for US$130m.

Now APO has announced that it has completed its acquisition of Distribution Legal Hemp (DLH) and NexGen (NG) for £3m. The purchase gives APO access to a distribution hub. A company statement says that “with 80% of its client base in Europe, the post-Brexit acquisition enables APO to continue to offer its EU clients a quick and efficient supply service.”

DLH has retail brands Pure CBD and Pet CBD, and tobacco substitute brands Sensy and Jane’s Garden. APO’s statement says that DLH’s access to multiple major retain chains will give APO “a strong foothold to build market share in the fast-growing CBD industry’s European retail sector.” It suggests that DLH in turn will benefit from “being part of a larger, global-facing company.”

The acquisition is funded by existing capital, according to APO. Both companies have shown rapid growth, quoting an increase in revenue for APO of 215% in the past year to a 2021 forecast of £12.6m, and 170% for DLH in the past year.

APO’s CEO Gavin Ogilvie (pictured right) will lead the enlarged company, and DLH/NexGen’s CEO Joeri Perneel (pictured left) will become APO’s chief commercial officer, retaining a focus on the companies’ activities in the Benelux and French markets.

Mr Ogilvie comments, “As part of our ambitious global expansion plans, DLH gives us a brilliant complementary business. Belgium is the first nation in Europe to legalise the use of CBD flower through their existing tobacco substitutes legislation, so by buying DLH we have instantly secured 75% of Belgium’s CBD flower market. It’s likely that France will also seek to regulate the CBD flower through the same legal mechanism before long, and APO will therefore be in a strong strategic position to take full advantage of this new market when it opens.”

Mr Perneel adds, “Both companies have known each other and worked together for more than two years. The deal is on all levels complementary. DLH/NexGen is the market leader in Belgium within the segment of tobacco substitute, and is a pioneer in the segment of wellness.

“We are only at the beginning of the journey, and I’m happy to work with APO to build this new group into a world-class player.”

The highest appeals court in France, Cour de Cassation, ruled yesterday that the sale of CBD is not illegal if it has been produced legally in a member state of the EU, based on a decision last year by the European Court of Justice. It did not, however, rule on whether selling CBD in France is legal, returning the particular case (a shop, Foxseeds, selling cannabis buds) to a lower court in Grenoble for another ruling.

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