HempFusion Wellness inks deal to buy CBD brand leader Sagely Naturals

HempFusion Wellness Inc (TSE:CBD.U) (OTCQX:CBDHF) (FRA:8OO) announced it has signed a definitive agreement to acquire Sagely Enterprises, Inc, trading as Sagely Naturals, a provider of  premium CBD products for women. 

The company said Sagely Naturals generated net revenue of over US$4.19 million in 2020, and will boost HempFusion’s retail distribution by an additional 14,000 plus stores. 

“Upon closing, the acquisition of Sagely Naturals immediately adds significant value to shareholders. 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 (stock-keeping units), HempFusion is in its strongest position to date,” HempFusion Wellness CEO Jason Mitchell said in a statement. 

READ: HempFusion Wellness sees higher 1Q revenue as consumer e-commerce sales surge

“We expect the combined proforma entity to achieve substantial growth over our historical financials and cement our leadership position in the CBD industry while setting the stage for tremendous growth in 2021 and 2022,” Mitchell added.

HempFusion noted that Sagely Naturals is the largest female-founded CBD wellness brand, with its products being sold in key retailers such as CVS, Rite Aid, Albertsons, Sprouts, Nordstrom, and many other independent regional grocers and natural food stores in addition to sagelynaturals.com.

It added that Sagely Naturals has a 23% CBD topicals market share in the Drug channel and a 13.8% market share in the Multiple Outlet channel, according to IRI data.

To acquire Sagely Naturals, HempFusion has agreed to pay an initial sum of US$25 million, consisting of US$2 million in cash plus US$23 million in HempFusion stock issued at a deemed price per share of about US$1.021.

Sagely Naturals owners may also be entitled to receive an earnout payment of up to US$5 million if the company achieves certain revenue targets within 12 months of closing, with 40% of any earnout payment to be paid in HempFusion shares and the balance paid in cash.

Upon completion of the transaction, Sagely Naturals will be a wholly-owned subsidiary of HempFusion, with Kerrigan Behrens and Kaley Nichol remaining as co-CEOs of Sagely Naturals.

HempFusion distributes its family of brands, including HempFusion, Probulin Probiotics, Biome Research, and HF Labs, to around 4,000 retail locations across all 50 states of the US and select international locations.

In addition, its wholly-owned subsidiary Probulin Probiotics is one of the fastest-growing probiotics companies in the US, according to data technology company SPINS. The subsidiary offers the unique MAKtrek 3-D system that ensures more probiotics arrive alive.

Contact Sean at [email protected]

Story by ProactiveInvestors