22nd Century Group, Inc. XXII announced the acquisition of privately held GVB Biopharma.
GVB - a contract development and manufacturing organization - provides hemp-derived active ingredients for the pharmaceutical and consumer goods industries worldwide.
The aggregate consideration for the transaction consisted of the assumption of roughly $4.5 million of debt, GVB's closing costs, and the issuance to GVB of 32.9 million unregistered shares of common stock of the company.
Cowen served as an exclusive financial advisor to GVB. Grant Thornton provided an independent valuation for the 22nd Century.
Dorsey & Whitney LLP served as legal counsel to GVB, and 22nd Century's legal counsel was Shulman Rogers PC.
Why It Matters?
GVB's strengths compliment 22nd Century's existing upstream and downstream value chains, including expertise in cannabinoid receptor science with CannaMetrix, plant research and proprietary genetics through its KeyGene partnership, breeding expertise with Extracts, and cultivation capabilities at Needle Rock Farms.
The combination with the 22nd Century establishes a global one-of-a-kind asset to serve the rapidly growing hemp/cannabis ingredient market.
GVB expects 2022 revenue of approximately $48 million, a 58% increase year-over-year, gross margin in excess of 44%, and positive cash flow.
"GVB represents a transformational acquisition for the 22nd Century that will enable us to rapidly grow our hemp/cannabis franchise," James A. Mish, the company's CEO, said. "GVB is one of the largest CBD suppliers globally, possessing innovative, vertically integrated cannabinoid product manufacturing technologies driving industry-leading scale and cost-efficiency."
Upon closing, the transaction is expected to more than double 22nd Century's revenue, be immediately accretive to adjusted EBITDA, and generate positive cash flow from the acquired assets in the near term.
GVB is also well-positioned to lead the international expansion, including multiple international joint ventures in Europe to co-develop and co-own processing and distribution companies aligned to market needs. GVB currently has offices in the United Kingdom and Brussels.
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