- PLUS has the right (but no obligation) to buy Emerald Bay Wellness and Emerald Bay Extracts’ business assets
- Emerald Bay Extracts has been one of Plus Products’ largest suppliers for the past year
- If the option is exercised, PLUS will reap the benefits of vertical integration and directly interact with the cannabis plant
Plus Products Inc. (CSE: PLUS) (OTCQX: PLPRF), manufacturer and marketer of cannabis food products, has purchased an option to buy California-based cannabis oil manufacturer Emerald Bay Wellness LLC and the business assets of Emerald Bay Extracts. The option specifies cash and stock consideration to acquire one of PLUS’ largest cannabis oil suppliers and a supply partner of more than one year (http://cnw.fm/9G6sw).
In consideration for the option, PLUS will deliver a $400,000 secured loan to Emerald Bay Extracts. If the option is exercised, terms call for the issuance of approximately 1.2 million subordinate voting shares of PLUS and $250,000 in cash; in addition, Emerald Bay would not be required to repay the loan. Some 70 percent of the deal’s consideration would be subject to performance targets including revenue, which totals almost $28 million over a two-year earn-out period.
“We targeted this acquisition because it allows us to reap the benefits of vertical integration while maintaining a focus on product manufacturing,” PLUS CEO Jake Heimark stated in a news release. “Ultimately, this is a rare opportunity to improve quality control, cut costs and grow revenues all at the same time.” Acquiring Emerald Bay would give PLUS the opportunity to “directly interact with the cannabis plant,” Heimark added.
PLUS said that, if the option is exercised, it would give the company in-house cannabis extraction capabilities that would improve quality control and raise gross margins on its core edibles business. Exercising the option could also create a new revenue stream and expanded new-product development capabilities.
San Mateo, California-based PLUS is a cannabis-infused, branded products manufacturer selling to regulated medicinal and adult-use recreational markets in California and Nevada. PLUS is focused on building the largest cannabis brand by growing organically and through acquisitions.
For more information, visit the company’s website at www.PlusProducts.com
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