TGOD's Stock Slightly Up On Announcing $21M Acquisition Of Cannabis Products Maker Galaxie Brands

Cannabis company The Green Organic Dutchman Holdings Ltd. TGOD TGODF announced Monday that it is acquiring all of the issued and outstanding shares of Galaxie Brands Corporation, a producer of 2.0 cannabis products, through its wholly-owned subsidiary for roughly CA$21 million ($16,94 million) in stock.

The Deal Details

Based in Toronto, the company agreed to issue some 120 million of its shares to Galaxie Brands at $0.175 per share once the transaction closes.

The total consideration for the acquisition includes 40 million TGOD's shares that will be placed into an indemnity escrow account to be released no later than December 31, 2023, subject to the escrow release terms of an indemnity escrow agreement and the remainder of 80 million shares that will be subject to an escrow agreement, whereby one-sixth of these shares will be released every four months.

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 the end of 2022.

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

The transaction is expected to close on or about November 15.

What It Means For TGOD

The acquisition significantly expands and diversifies TGOD's product portfolio by adding Galaxie's exclusive joint venture in Canada, with a significant U.S. cannabis edible brand as well as its differentiated portfolio in pre-rolls, vapes and solventless products, including Galaxie's flagship brand 'Cruuzy.'

The combined entity will leverage TGOD's unique quality organic platform and cultivation capabilities and Galaxie's differentiated infused pre-rolls and full melt vapes, resulting in the expansion of the product portfolio from 157 to 215 listings nationwide and key product innovations being deployed across all brands.

Moreover, the deal will increase scale and expand operating capabilities in key growth verticals with the ability to accelerate TGOD's entry into the U.S. market via Galaxie's strategic U.S. partnerships and existing industry relationships.

Angus Footman, current CEO of Galaxie, will join TGOD's board of directors as chairman, Olivier Dufourmantelle, president of Galaxie will join the TGOD team as president of U.S. operations and director on the board and current TGOD chairman Jeff Scott will remain on the board as the independent lead director. The TGOD's executive team will continue to be led by Sean Bovingdon, CEO and interim CFO.

What's Next?

"We believe our complementary brands and consumer bases will result in stronger revenues and overall financial performance for TGOD, while preparing for a future expansion to the U.S," Bovingdon explained.

Footman believes that the transaction will boost "our growth plans and expand our product portfolios and operations."

More recent news from TGOD:

• 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 3.24% higher at $0.1339 per share at the time of writing Monday morning.

Photo: Courtesy of The Green Organic Dutchman Holdings Ltd.