Boosh Plant-Based Brands Inc (CSE:VEGI, OTC:VGGIF) revealed that it has struck an asset purchase agreement to acquire substantially all the assets of Beanfields Inc in an all-share deal worth $8 million.
Boosh will also pay US$400,000 through the issuance of a promissory note to the vendors bearing interest at a rate of 6% per annum and commit to providing Beanfields nearly US$1 million in working capital funding.
The Vancouver-based plant-based company clarified that the acquisition of the assets has not yet completed. It is currently anticipated to close on February 16, 2022.
Boosh described the deal as an “instantly accretive” opportunity that brings a top brand into its portfolio. The transaction catapults Boosh into being one of the largest plant-based food companies in the world.
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Beanfields produces and sells a healthy, gluten-free, non-GMO, vegan, top eight allergen-free flavored bean-based chip. The portfolio includes a broad offering of nine flavors, including Black Bean, Sour Cream and Onion, Firey Hot and Nacho flavors. They have capitalized on the industry trends of 'Better For You' in the salty snack category.
Beanfields received the 2019 "Rising Star Award" from NOSH (Natural, Organic, Sustainable and Healthy) organization. In June 2021, it introduced its Rings line, which became one of its fastest-selling products. In December, NOSH recognized Rings as Best New Product for 2021. Beanfields has authorizations currently in over 7,000 outlets throughout North America.
In a statement, Boosh CEO Jim Pakulis said: "The Beanfields team did an incredible job building Beanfields into a top-five brand in the category. They led the category with innovation and built a truly differentiated brand. Now with Boosh's resources, infrastructure, and capabilities, we expect to help Beanfields grow to its next level."
Boosh founder and President Connie Marples noted that it is an “amazing opportunity” to have one of the “fastest-growing plant-based snack chips and onion rings in both Canada and the US.”
"Beanfields' packing design, as well as their product lines, are directly in line with our style and philosophy,” added Marples. “Like Boosh, Beanfields provides fun, healthy, plant-based options for families to enjoy. We can't wait to introduce Beanfields as part of the Boosh family at the Natural Products Expo West in Anaheim, from March 10 through the 12."
“Operationally, we have all hands on deck during the transition period and will begin to reach out to the existing client base next week," said TJ Walsh, head of North American sales.
Since the deal has not yet closed, Boosh's revenue base has not been impacted so far. However, Boosh highlighted that its revenue could soar to an estimated $14.50 million trailing twelve months with the acquisition.
According to the company, the assets generated unaudited revenues of $14,599,920 during the year ended December 31, 2021. The firm, however, noted that Beanfields' past results are "not a guarantee of future performance, nor can there be any certainty that the assets will generate similar revenues" under Boosh's umbrella.
While Boosh anticipates substatial operational and cost savings, the firm pointed out that there can be "no certainty that cost-saving measures will be effective." Beanfields' expenses have historically exceeded its revenue, though it had recently adopted big restructuring measures. Boosh said it has started the preparation of audited financial statements of the assets for the years ended December 31, 2021, and 2020.
In addition, stores carrying Beanfields and/or Boosh would jump to 7,000 from 600 after the deal, noted the company. Post-acquisition Boosh will have a conservative 27.1 million shares outstanding. Moreover, it is the fourth and most significant acquisition in the past 12-months for Boosh, providing it with a large North American distribution platform.
Boosh is still eying acquisitions.
"This is one of the most significant acquisitions of my professional career, and I'll continue to be looking for additional accretive candidates for Boosh," said Pakulis.
Terms of the transaction
For the assets, Boosh will issue an aggregate of 8 million common shares to the vendors. All of the payment shares will be subject to a six-month contractual hold period, in addition to resale restrictions required under applicable securities laws. Thereafter, the holders have agreed that not more than 4% of the payment shares (or 320,000 payment shares) may be sold in any calendar month with certain exceptions.
Boosh will also pay US$400,000 through the issuance of a promissory note to the vendors bearing interest at a rate of 6% per annum, with interest-only payments until the 18-month maturity of the note, which may also be prepaid at any time without penalty.
Finally, Boosh will also commit to providing Beanfields aggregate working capital funding of US$1 million to be expended at the discretion of Boosh, of which US$250,000 was funded upon the execution of the asset purchase agreement and the remainder is to be funded on or before March 10, 2022.
Boosh will, with the assistance of its auditor, prepare audited financial statements of the business of the assets for the years ended December 31, 2021, and 2020. If the audited statements demonstrate a variance of 20% or greater of the representations made concerning the financial condition of the assets, Boosh may unwind the acquisition of the assets and cancel the note and return to treasury the payment shares, within 120 days of closing, which is currently expected to occur on February 16, 2022, subject to regulatory approvals as well as other customary conditions of closing.
The completion of the transaction will result in the creation of two new insiders of Boosh — Venture Lending & Leasing VIII Inc and Venture Lending & Leasing IX Inc — who will each hold 3.83 million of the payment shares, representing 14.14% of the then outstanding common shares of Boosh.
Boosh, through its wholly-owned subsidiary, Boosh Food, offers high-quality, gluten-free, 100% plant-based nutritional comfort foods.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive
-- UPDATES with closing date, revenue clarification --