Green Organic Dutchman Closes $21M Acquisition Of Cannabis Products Maker Galaxie Brands

The Green Organic Dutchman Holdings Ltd. TGOD TGODF announced Thursday that it has wrapped up the previously announced acquisition of Galaxie Brands Corporation.

Deal Details

Under the terms of the agreement, the Toronto-based company bought all of the issued and outstanding shares of Galaxie for roughly CA$21 million ($16.7 million).

As part of the deal, TGOD will assume $1.3 million of existing shareholder loans of Galaxie Brands, which are non-interest bearing until at least January 31, 2022.

In addition, the vendors of the Galaxie Shares are also entitled to earn up to CA$15 million in additional shares of TGOD, subject to the achievement of certain financial milestones by December 31, 2022.

As consideration for the transaction, TGOD has issued 120 million of its share at $0.175 per share, of which 40 million are under an indemnity escrow account to be released no later than December 31, 2023, while the remaining 80 million shares have been placed into an escrow account, whereby one-sixth of them will be released every four months.

There is also an earn-out provision whereby up to an additional 85,7 million TGOD's shares could be issued to vendors, subject to the achievement of certain milestones in 2022.

What It Means For TGOD

The acquisition diversifies TGOD's brand portfolio with the addition of Galaxie's unique pre-rolls, vapes, solventless products, and its flagship brand, Cruuzy.

Moreover, the deal significantly improves regional distribution across Canada as well as exposure to the edible category via Galaxie's exclusive joint venture with a major edible brand in the United States.

Galaxie's 26,000 square feet, Ontario-based and fully licensed by Health Canada production facility is expected to provide TGOD with additional cultivation, value-added processing, packaging, extraction and product development capabilities. As TGOD's wholly-owned subsidiary following the closing, Galaxie will remain the license holder for the facility.

What's Next?

The transaction is expected to accelerate TGOD's entry into the U.S. market as well as achieve cost synergies by combining activities in supply chain and distribution, research and product development, as well as cost reductions in sales, general and administrative activities and general overhead.

"As per our strategic plan, the completion of the transaction allows TGOD to accelerate domestic growth," said Sean Bovingdon, CEO and interim CFO of TGOD." With Galaxie's innovation and operating capabilities, scale and efficiencies, the combined entity will build stronger revenues and financial performance."

More recent news from TGOD:

• Green Organic Dutchman Partners With Acosta Canada To Increase National Market Share
• Green Organic Dutchman Completes First Shipment of Medical Cannabis Oils to Australia
• The Green Organic Dutchman To Debut On CSE, Poised To Enter U.S. Cannabis Market
• Green Organic Dutchman's Cannabis First To Be Distributed In South African Medical Marijuana Market
• Green Organic Dutchman Holdings Slightly Beats Projections With $11.8M In Q2 2021 Revenue, Canadian Cannabis Sales Up 55% QoQ

Price Action

TGOD's shares traded 2.64% higher at $0.1283 per share at the time of writing Thursday morning.

Photo: Courtesy of The Green Organic Dutchman Holdings Ltd.