- SLANG Worldwide (CNSX:SLNG) plans to acquire privately-owned Cultivate Brands
- Cultivate operates a range of brands and has an intellectual property portfolio, which will complement SLANG’s current goals
- An all-stock transaction of a non-material amount will complete the acquisition
- Several of SLANG’s products are currently performing well in Oregon, where retail sales exceeded C$1 billion in 2019
- Shares in SLANG are currently up 5.66 per cent to $0.28, with a market cap of $62.51 million
Toronto-based SLANG Worldwide (CNSX:SLNG) is about to acquire privately-owned Cultivate Brands.
SLANG is primarily focused on the cannabis consumer packaged goods sector, but owns a strong portfolio of other popular brands.
Cultivate operates a range of brands and intellectual property assets. It also owns extraction equipment and roughly C$4.5 million in cash.
SLANG expects that the acquisition will strengthen its current position in Oregon. The state has been forecast as a significant region for growth in 2020, due partly to its reputation as a mature recreational market.
The company’s O.penVAPE Craft RESERVE and Bakked Dabaratus products are established top performers in Oregon.
In addition, SLANG recently signed a partnership agreement with Cookies, a third-party Oregon brand. Cookies is likely to launch in the second quarter of this year.
According to BDS Analytics, Oregon reported over $1 billion in retail sales last year. This is a 27 per cent increase from the previous year.
SLANG CEO, Peter Miller, said the acquisition is consistent with the company’s growth strategy and its focus on capital efficiency.
“We are pleased to execute a deal that contributes brands, IP, equipment, and capital to the already robust SLANG portfolio and balance sheet.
“The acquisition of Cultivate will provide a unique opportunity to generate value in several ways including new production assets, supply chain efficiencies and potential new products,” he continued.
In an all-stock transaction, SLANG will issue a non-material amount of common shares in exchange for ownership of Cultivate.
The majority of the shares issued will be subject to a lock-up period with rolling expiration dates.
Cultivate founder, Mihalis Belantis, is looking forward to his company’s next phase of operations.
“We are pleased to align with a leading cannabis CPG company like SLANG, with its proven capability to develop and grow brands.
“This transaction offers significant potential upside to our investors, as well as an opportunity to leverage and commercialize the foundational work we completed during the start-up phase of our business,” he said.
The transaction will take place via a three-cornered merger, and is expected to close in April this year.
Shares in SLANG (SLNG) are currently up 5.66 per cent to $0.28, with a market cap of $62.51 million at 9:34 am EST.