Accelerating growth in both CBD businesses is the object of a deal struck by Canada-founded Yooma Wellness Inc and Birmingham-based Vitality CBD Ltd—a £10.2 million acquisition through which Yooma has purchased 100% of Vitality’s issued shares. The deal follows hot on the heels of Yooma’s dual-listing on the the AQSE.
Yooma’s stated objective is “to create a global vertically-integrated leader in the marketing, distribution and sale of wellness products including hemp seed oil and hemp-derived CBD products”, and it has operating subsidiaries in the UK, France, China, Japan, and the United States. The acquisition has been made via its wholly-owned subsidiary, Yooma Europe Ltd.
When Yooma shares began trading on the Aquis Stock Exchange Growth Market (AQSE) following dual-listing on Tuesday 10 August, chairman Lorne Abony commented, “Yooma’s listing on the AQSE provides us with a solid foundation on which to execute our growth strategy in the UK, Europe and beyond. Our strategic focus on value accretive acquisitions throughout the world will help to solidify Yooma’s place as a global wellness leader.”
The subsequent acquisition of Vitality brings Yooma a CBD brand with distribution through UK retailers including Boots, Tesco, ASDA and Lloyds Pharmacy, and online retailers including Amazon, Very and Ocado. Founded in 2018, Vitality’s reported product portfolio has over 60 SKUs including oils and sprays in various flavours and strengths, edibles, and a range of CBD skin-care cosmetic products, produced with an eye to quality: “We’ve made the conscious effort to ensure that each of our products are organically sourced with THC-free high-quality hemp extract.”
Vitality’s presence on the shelves of key retailers may bring market opportunities for other brands within the Yooma group, for instance, MYO Plant Nutrition. The acquisition also adds “a significant source of recurring revenue to Yooma”.
Lorne Abony sets out Yooma’s reasoning: “Completing the acquisition of Vitality is the first step of the strategic plan the company outlined to investors at the time of our UK financing and dual-listing—to buy and build companies globally, focused on materially increasing the company’s top-line revenue, leveraging the group’s integrated supply chain to drive margin growth, and expanding distribution for the existing product portfolio.
“This acquisition will help accelerate our growth by exporting these branded products to other Yooma jurisdictions and integrating with our MYO Plant Nutrition operations and distribution. Vitality is a market leader in the UK, with presence in major retail outlets such as Boots, Tesco, Asda and Lloyds Pharmacy, and we look forward to working with the team at Vitality.”
Vitality’s management team will remain in place following the acquisition. Co-founder and managing director Nikhil Nathwani outlines the advantages of the deal to Vitality: “The whole Vitality CBD team are excited to be joining the Yooma group. CBD is a growing industry, not only in the UK but globally, and the acquisition positions us nicely to be able to continue to expand and grow the business.”
In its announcement on the Aquis Exchange website, Yooma has set out the following details of the acquisition. The £10.2 million ‘consideration’ comprises:
• £4 million cash at closing (‘cash consideration’) subject to agreed working capital adjustments (Vitality being acquired on a cash-free/debt-free basis)
• 7,706,422 new common shares of the company [Yooma] (‘consideration shares’) representing £4.2 million issued at an implied price of £0.545 per share
• up to £2 million of cash or share-based consideration, at the company’s option, subject to the achievement of revenue milestones by Vitality for the financial year 2022 as set out below:
|Value of the 2022 Revenue||Value of the deferred consideration due to the sellers|
|Greater than £5 million but less than £6 million||£500,000|
|£6 million or more, but less than £7 million||£1 million|
|£7 million but less than £8 million||£1.5 million|
|£8 million or more||£2 million|
Cash consideration for the acquisition will be funded from the company’s existing cash.