Tuesday, September 27, 2022

ST Brands and Always Pure Organics enter LOI for $130m purchase

US CBD products firm New You Inc, has announced that its subsidiary, the acquisition company ST Brands, has entered into a non-binding letter of intent (LOI) to buy UK manufacturer and distributor of cannabis-based products Always Pure Organics (APO) for US$130m.

This agreement follows swiftly on from APO’s announcement of plans to expand its facilities.

Under the terms set out in the LOI, ST Brands would acquire 100% ownership of APO at a purchase price of US$130m, with $10m due on closure of the deal, followed by five further payments over the next 14 months. New You plans to raise additional funds to finance each of the five payments.

The companies are already connected: APO is the primary UK, Europe and Japan distributor for a product from another of ST Brands’ recent acquisitions, Infinite CBD’s edible gummies.

APO sells bulk CBD ingredients (including CBD isolate and distillate), bulk products (including CBD oil, balm, patches, pet oil), and white label items. Its applications for EU and UK novel food validation are all submitted and in progress.

ST Brands is a holding company of branded assets that create, develop, market, and sell CBD products to various segments of the global consumer market. “The company seeks to acquire scalable cannabis companies with the potential to become sector leaders in the legal cannabis market. We provide growth capital and expert professional oversight in exchange for stock in their company,” a report from ST Brands states.

The executive chairman of New You, Jason Frankovich stated, “Through our recent acquisition of APO supplier, Infinite CBD, we have observed that Always Pure has not compromised in their ambition to achieve market leadership through unsurpassed customer service, efficiency, and product quality. The combination of our global supply and distribution capabilities with their regional network and production is highly complementary.”

APO’s CEO Gavin Ogilvie commented, “Our ambitious expansion plans require strategic capital, and we are excited to be combining forces with ST Brands to help achieve our growth objectives. Jason and his team have created an impressive platform for growth.”

Both parties intend to complete the definitive securities purchase agreement within 30 days of the LOI.

APO has a manufacturing base in Manchester and has begun an expansion of its facilities, with more space for lab and operations teams, including a 10,000 square foot warehouse. Gavin Ogilvie declared, “We’re so proud of the growth we’ve achieved. In two and a half years the business has gone from three people working out of a bedroom, to over 50 team members servicing 500 global clients. With this comes a responsibility to our customers and partners to continue to deliver the personal, quick and hands-on service that we have done historically.

“With the increasing demand placed on our operations and production teams, this was becoming a mounting challenge. Therefore, we have invested heavily to overhaul and upsize our warehouse and clean rooms. This week we began the construction in our new 10,000 square foot warehouse.

“We want to offer the best products, with more variety, more quickly and with a better user-experience than any of our competitors. This is just one step in achieving that.”

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