HempFusion To Buy CBD Brand Sagely Naturals For $25M

Health and wellness CBD company HempFusion Wellness Inc. CBD CBDHF announced Monday it will buy CBD brand Sagely Naturals in a $25 million stock and cash deal.

Sagely Naturals is one of the largest female-founded CBD wellness brands. Launched in 2015, it has since worked its way up and onto the shelves of popular retailers such as CVS, Rite Aid RAD, Sprouts Farmers Market SFM, Nordstrom JWN, among others.

Sagely is said to be number one in CBD topicals with a 23% market share in the pharmacy channel and 13.8% market share in the multiple-outlet channel, based on IRI data. Furthermore, celebrities like Cameron Diaz, Zoe Saldana and Molly Sims are known as consumers and investors in the brand.

What happened

The two companies entered a merger agreement, under which Sagely Naturals will become a wholly-owned subsidiary of HempFusion.

Under the deal, HempFusion will compensate the acquisition with $25 million consisting of $2 million in cash and $23 million in shares of the company to be issued at a price of approximately $1.021 per share.

Furthermore, the holders of equity interests in Sagely Naturals may be eligible to obtain an earnout payment of up to $5 million if Sagely Naturals achieves specific revenue targets in the following twelve months upon the transaction.

Once the transaction is finalized Kerrigan Behrens and Kaley Nichol will continue as co-CEOs of Sagely Naturals.

Why It Matters

Denver, Colorado-based Hemp Fusion highlighted several important benefits from this deal, such as:

• Revenue boost - Sagely Naturals’ previous year revenue of more than $4.19 million combined with the APCNA Holdings transaction more than triples HempFusion’s 2020 revenue;
• Significant expansion of its distribution footprint with instant distribution to more than 14,000 stores;
• Introduction ingestible CBD products into these 14,000 stores;
• HempFusions’ support of regulatory compliance should help Sagely Naturals confirm its strong position in the CBD space;
• Sagely Naturals’ C-Suite will advance HempFusion’s marketing, innovation operations and customer-channel relationships.

“Upon closing, the acquisition of Sagely Naturals immediately adds significant value to shareholders,” Jason Mitchell, N.D., HempFusion’s co-founder and CEO said. “By more than tripling our 2020 revenue (when combined with the closing of Apothecanna), expanding to over 15,000 stores, expanding our distribution strategy to six channels, combining some of the top executive talent in the industry, and bringing together over 75 incredible and best-selling SKUs, HempFusion is in its strongest position to date.”

Price Action

HempFusion’s shares were trading 6.46% lower at 79 cents per share at the time of writing.

Photo by Enecta Cannabis extracts on Unsplash