BevCanna's Stock Plunges After Announcing $21M All-Stock Acquisition Of Embark Health

BevCanna Enterprises Inc. BEV BVNNF announced Monday that it is acquiring Embark Health Inc. for $21 million in an all-stock transaction.

Deal Details

Under the terms of the agreement between Embark Health, an arm's length privately held corporation, 1323977 B.C. Ltd, a wholly-owned subsidiary of BevCanna, Bruce Dawson-Scully, as shareholder representative, and certain shareholders of Embark, BevCanna opted to acquire all of Embark's issued and outstanding securities by way of a three-cornered amalgamation.

Once the transaction closes, Embark will become a wholly-owned subsidiary of BevCanna. The new entity will continue to operate under the Embark Health Inc. name.

In exchange, BevCanna agreed to issue to Embark's shareholders 46.7 million of its shares at 45 cents per share.

In addition, each Embark shareholder will receive earn-out payments of an aggregate of up to roughly $9.2 million, contingent upon Embark achieving up to $92.18 million EBITDA over the first three completed financial years following the closing.

The acquisition is expected to close upon receiving the Canadian Securities Exchange and shareholder approval by Embark.

Why It Matters & What's Next?

John Campbell, BevCanna's CFO, said that Embark's acquisition "significantly accelerates BevCanna's evolution into a diversified health and wellness company."

Apart from the 40,000 square foot production facility in Delta, British Columbia

and a facility in Calgary, Alberta, spanning 4,600 square feet, the deal includes a wide range of unique brands across all three cannabis 2.0 categories, as well as new management and operations team members: Bruce Dawson-Scully, Marcus "Bubbleman" Richardson, Michael West and Curtis Leifso.

Moreover, it will also boost the company's beverage portfolio with the addition of proprietary nanotechnology and rapid onset delivery technology for beverage, topical and edible products as well as innovative solventless extraction technology.

"The acquisition will unlock significant value for both organizations and brings together two exceptionally experienced teams, forming one of the most diverse and innovative health and wellness companies in the industry," Campbell added.

2021 Deals & Price Action

In February, BevCanna reported purchasing Naturo Group Investments Inc. after months of negotiations. Following the closing of the acquisition of the beverage developer and manufacturer, BevCanna continued to run both companies' joint business, adding over 3,000 retail points, an on-site natural alkaline spring water aquifer, a 40,000 square feet beverage facility as well as 315-acres of outdoor cultivatable land under its helm.

Shortly after, the company signed a supply deal with Nextleaf Solutions Ltd., agreeing to utilize Nextleaf's Rapid Emulsion Technology by OILS THC and CBD concentrate to produce its in-house branded and white-label products.

BevCanna's shares traded 11.69% lower at $0.2599 per share after market close on Monday.

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