TORONTO, March 3, 2020 /CNW/ - SLANG Worldwide Inc. (CNSX: SLNG), ("SLANG" or the "Company"), a leading global cannabis consumer packaged goods company with a robust portfolio of popular brands, today announced that it has entered into an acquisition agreement dated March 2, 2020 (the "Acquisition Agreement") to acquire (the "Acquisition") Cultivate Brands Corp. ("Cultivate").
Cultivate is a privately-owned company with a portfolio of brands and other intellectual property which are complementary to SLANG's portfolio. Its assets include extraction equipment and other machinery which SLANG intends to use within its network, cash of approximately CAD $4.5 million, and a strategic investment in a company within the supply chain. Cultivate is not currently consuming any cash in its operations.
The Acquisition is expected to further strengthen SLANG's position in Oregon, which the Company has identified as a core market for growth in 2020, due to its status as one of the most mature recreational markets in the United States. SLANG's O.penVAPE Craft RESERVE and Bakked Dabaratus products are strong performers in the state, and the Company recently announced a strategic partnership in Oregon with Cookies, a leading third-party brand that the Company expects to launch in Q2 2020. The Oregon market had retail sales of $810M USD during 2019 and grew 27% year over year as of December 2019 (per BDS Analytics).
The Acquisition is structured as an all-stock transaction in which SLANG will issue a non-material amount of common shares ("SLANG Shares") in exchange for all the issued and outstanding shares of Cultivate. The majority of the SLANG Shares issued pursuant to the Acquisition will be subject to a lock-up period with rolling expiration dates.
"We are pleased to execute a deal that contributes brands, IP, equipment, and capital to the already robust SLANG portfolio and balance sheet," said SLANG CEO Peter Miller. "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. This acquisition is consistent with our disciplined growth strategy and our focus on capital efficiency."
"We are pleased to align with a leading cannabis CPG company like SLANG, with its proven capability to develop and grow brands," said Mihalis Belantis, Founder of Cultivate. "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."
The Acquisition will be completed by way of three-cornered amalgamation and is anticipated to close in April 2020. Closing of the Acquisition is subject to the satisfaction or waiver of customary closing conditions, including the receipt of the approval of the shareholders of Cultivate and applicable regulatory approvals.
About SLANG Worldwide Inc.
SLANG Worldwide Inc. is a global leader in the cannabis CPG sector with a diversified portfolio of popular brands distributed across the United States. The Company specializes in acquiring and developing market-proven regional brands as well as launching innovative new brands to seize global market opportunities. SLANG is listed on the Canadian Securities Exchange under the ticker symbol SLNG. For more information, please visit www.slangww.com.
This news release contains statements that constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements, or developments in the industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. The forward-looking information and forward-looking statements contained herein may include, but is not limited to, statements regarding the Acquisition, including the terms, the closing date and benefits thereof and the distribution and sale of SLANG's products in Oregon.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management of SLANG at this time, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that could cause actual results to differ materially from those expressed or implied in such statements. Investors are cautioned not to put undue reliance on forward-looking statements. Applicable risks and uncertainties include, but are not limited to regulatory risks, changes in laws, resolutions and guidelines, market risks, concentration risks, operating history, competition, the risks associated with international and foreign operations and the other risks identified under the headings "Risk Factors" in SLANG's final long form prospectus dated January 17, 2019 and "Risks and Uncertainties" in the management discussion and analysis for the year ended December 31, 2018, each as filed on SEDAR at www.sedar.com. SLANG is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
The Canadian Securities Exchange has not reviewed, approved or disapproved the content of this news release.
SOURCE SLANG WORLDWIDE