Namaste Technologies Inc. (CSE:N) (OTC:NXTTF) (FRA:M5BQ) announced this morning that they have entered into a definitive agreement to acquire all issued and outstanding shares of Australian Vaporizers PTY Limited for a mixture of cash, common shares of Namaste, as well as an "earn-out payment."
Terms of the Deal
Purchase price of 1x the 12-month trailing revenues of $5.0 million, plus the value of inventory acquired within 6 months preceding the closing of the deal, and half of the value of Australian Vaporizers' inventory acquired prior to 6 months before the closing, minus all liabilities and plus trade debt and cash.
The total estimated purchase price equals approximately $5.5 million.
Consideration of 75% cash on closing, 10% in common shares based on the 20-day volume weighted average price upon signing of definitive agreement and 15% earn-out based on sales and integration milestones
Receiving all director and required regulatory approvals related to the deal, including CSE exchange approval if necessary.
Why is this a Good Deal for Namaste?
Namaste would become the leading vaporizer and accessories company in Australia.
Australia has a population of approximately 24.3 million people.
Expands Namaste's consumer database to more than 300,000 customers globally.
This further solidifies Namaste's positioning with one of the largest databases of cannabis consumers globally accross all major markets.
Namaste intends to enter commercial arrangements to further monetize these customers.
This sets up Namaste with over $18.0 million of run rate revenue and moves Namaste into profitable territory.
Australian Vaporizers high margins are beneficial to the overall margins of the combined entity.
This deal gives Namaste an Australian distribution center as well as additional technical staff.
The acquisition has an attractive valuation at roughly 1x revenues and 5x EBITDA.
How Will Namaste Finance the Deal?
Announced alongside the acquisition of Australian Vaporizers, Namaste also announced a bought-deal financing of 24 million units at a price of $0.25 per unit. This raises total gross proceeds for Namaste of $6 million to finance the deal. Each unit consists of "one common share of the Company (a "Share") and one-half of one common share purchase warrant (a "Warrant"). Each Warrant shall entitle the holder thereof to acquire one Share at a price of $0.35 for a period of 24 months following the Closing Date." Additionally, the underwriters of the deal have the right to purchase an added 3.6 million units as part of an over-allotment option.
More About Namaste Technologies
"Namaste Technologies Inc. is an emerging leader in vaporizer and accessories space. Namaste has 26 ecommerce retail stores in 20 countries, offers the largest range of brand name vaporizers products on the market and is actively manufacturing and launching multiple unique proprietary products for retail and wholesale distribution. The Company is currently focused on expanding its product offering, acquisitions and strategic partnerships, and entering new markets globally."
More About Australian Vaporizers
"Australian Vaporizers was founded in 2010 and has grown to become the largest online retailer of vaporizers in Australia. The company's website www.australianvaporizers.com.au has approximately 80% of the market share. The company's customer database has over 48,000 individuals that have made upwards of 77,000 orders during the lifespan of the company."