Market Overview

Charlotte's Web To Take Over Abacus Health, Form Major Hemp Player

Charlotte's Web To Take Over Abacus Health, Form Major Hemp Player

Hemp wellness company Charlotte's Web Holdings Inc. (TSX: CWEB) (OTC: CWBHF) and Abacus Health Products Inc. (CSE: ABCS) (OTC: ABAHF) have agreed to a CA$99 million ($68.2 million) merger.

Per the joint announcement Monday, Charlotte’s Web will obtain all issued and outstanding subordinate voting shares of Abacus after all outstanding proportionate voting shares have been converted into Abacus shares.

For each Abacus share held, Abacus shareholders will attain 0.85 Charlotte’s Web shares, with a price of CA$4.39 per Abacus share for a total consideration of CA$99 million, based on the 10-day volume-weighted average price of Charlotte’s Web shares of CA$5.17.

Abacus shareholders will obtain around 19.2 million Charlotte’s Web shares, or 15% of the issued and outstanding pro forma shares.

The acquisition is expected to form one of the biggest vertically integrated hemp-derived CBD companies, giving the combined entity about 35% of U.S. CBD sales, according to the press release.

Charlotte’s Web is known as a dominant producer of hemp-derived CBD wellness products, including oil, capsules and gummies.

Abacus is a producer of OTC topical products.

In the third quarter of 2019, both companies’ sales amounted to $29.1 million.

Charlotte's Web CEO Deanie Elsner called the merger "a logical strategic move" to strengthen each business and "reflect the evolution of the category" in a statement. 

"Because most of Abacus's products are positioned in adjacent categories, our combined distribution reach has limited shelf overlap," Elsner said. 

"Together we are the most developed CBD company across every channel and segment and positioned to accelerate our growth and extend our market share. Furthermore, it enables us to drive more scale production through our vertically integrated infrastructure."

Charlotte’s Web’ shares were trading 10.45% higher at $3.70 per share at the time of publication Monday, while Abacus shares were higher by 18.36% at $2.35 per share. 

Photo courtesy of Charlotte's Web. 

Related Links:

Charlotte's Web Trades Down After Reporting $1.3M Q3 Net Loss, Increases In E-Commerce, Retail Sales

Abacus Health Products To Expand US Retail Presence With Latest Acquisition


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