Cash and stock deal for Polish hemp firm: $15.5 million

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The Green Organic Dutchman Holdings Ltd. (TGOD) said it will buy 100% of HemPoland, maker of fast-moving CBD brand CannabiGold, in a deal that values the Elblag, Poland-based company at $15.5 million.

The agreement to acquire privately-held HemPoland comprises $7.75 million in cash and 1,968,323 in restricted TGOD shares currently valued at $7.75 million, TGOD said in a release. TGOD, based in Ancaster, Ontario, Canada, trades on the Toronto Stock Exchange and OTC in the U.S.

$12 million in added incentives

Additionally, the sellers can get performance based incentives of up to $12 million for delivery of $32 million of EBITDA in fiscal year 2021, according to the release.

TGOD also agreed to provide a $10.3 million cash investment “for rapid European expansion,” through funding R&D, drug development and global initiatives.

TGOD called the acquisition a “key component” in the company’s drive to expand its global distribution network. “Gaining market share with CBD products now, in the EU, with over 700 locations allows TGOD to establish immediate brand awareness across all verticals including infused beverages,” TGOD’s CEO Brian Athaide said, noting the deal opens “a gateway to Europe’s 750 million people.”

Access to capital

Kowalski_HemPoland

Maciej Kowalski

“Having access to TGOD’s capital, licensing deals, experienced leadership team, and intellectual property will significantly drive momentum for our brand and our company.”said Maciej Kowalski, Founder and CEO of HemPoland. “The market and demand for premium organic cannabis and CBD oil is just the beginning, ultimately leading to a variety of higher margin products,”

His company’s CannabiGold brand CBD products have expanded into 13 markets over the last two years. The products are turned out via state-of-the-art CO2 extraction technologies, while an on-site laboratory monitors for standards and quality.

Distribution in 13 countries

Vertically integrated HemPoland controls 1,250 acres of hemp fields in Poland via third parties, as well as commercial scale extraction units. The company has distribution in Poland, Austria, Netherlands, Germany, United Kingdom, Italy, Switzerland, Portugal, Ireland, Czech Republic, Slovenia, Lithuania, and Estonia, and product sales in over 700 locations.

HemPoland, which has 60 employees, processed over 32,000 kg of dried flowers and 310 kg of organic CBD extract in 2017.

Licensed in Canada

The Green Organic Dutchman Holdings Ltd.,  is an R&D company licensed under Access to Cannabis for Medical Purposes Regulations governing the cultivation of medical cannabis in Canada. The company grows organic cannabis at facilities in Ancaster.

Aurora Cannabis Inc., also a Canadian licensed cannabis producer, owns 17.5% of TGOD, which it purchased for $60 million.