Establishes large scale U.S.-based hemp
extraction capacity and creates a unique North American platform to
provide customers with value-added products
LAVAL, QC, July 24, 2019 /PRNewswire/ - Neptune Wellness
Solutions Inc. ("Neptune" or the "Company") (NASDAQ: NEPT)
(TSX: NEPT), a North American leader in extraction,
formulation and turnkey packaging solutions, has completed the
acquisition of the assets of SugarLeaf Labs, LLC and Forest
Remedies LLC (collectively, "SugarLeaf"). The acquisition was first
announced on May 9, 2019.
"The acquisition of SugarLeaf, combined with Neptune allows us
to create a leading North American extraction platform with
significant capacity available to serve our customers on both sides
of the border. Furthermore, considering the significant growth
anticipated in hemp-based products, this acquisition provides
Neptune with capabilities to satisfy a wide array of clients.
Finally, we anticipate a significant contribution from this
acquisition, as indicated by the large earnout structure providing
adequate risk sharing," said Michael
Cammarata, Neptune President
and CEO.
SugarLeaf brings to Neptune
- New capabilities to supply hemp extracts and finished products
to a broad U.S. customer base.
- Extraction capacity that is expected to reach an annual run
rate of 1,500,000 kilos of biomass by the end of 2019 with
opportunities to further expand capacity.
- Cutting-edge cold ethanol processing technology producing
high-quality broad-spectrum extracts and refined full spectrum
extracts.
- Strategic and well diversified sourcing established, with
multiple local and large regional hemp farmer partners, ensuring
traceability of finished product back directly to the farms.
- Rigorous testing protocols to ensure high quality biomass.
- Pursuit of organic certification and already sourcing from
farmers who are certified organic or using organic practices.
- Management team with extensive experience in hemp
extraction.
- The U.S. market for hemp-derived CBD based products is evolving
rapidly driven by multiple product categories and could reach
$US 16 billion (1) by
2025.
"We are extremely proud to be part of the Neptune family and
look forward to working in collaboration with their entire team,"
said Peter Galloway, President of
SugarLeaf. "The hemp extract opportunity is significant, and our
sales pipeline is healthy giving us comfort that we are well
positioned to execute on our business plan."
Financial Considerations
Neptune paid an initial
consideration for SugarLeaf of US$18
million, a combination of US$12
million in cash and US$6
million or 1,587,301 in common shares. Additionally, by
achieving certain annual adjusted EBITDA and other performance
targets, earnouts could reach US$132
million, reflecting a valuation multiple below 5x EBITDA, as
previously disclosed. The earnout payments over the next three
years are to be paid with a combination of cash or common shares,
with at least 50% in cash. The initial cash consideration of this
transaction was funded with the proceeds of the private placement
announced on July 18, 2019.
(1)
|
Source: Cowen
Equity Research & Cowen Washington Research
Group
|
About Neptune Wellness Solutions Inc.
Neptune
Wellness Solutions specializes in the extraction, purification and
formulation of health and wellness products. Neptune's wholly owned
subsidiary, 9354-7537 Québec Inc., is licensed by Health Canada to
process cannabis at its 50,000-square-foot facility located in
Sherbooke, Quebec. With the recent
acquisition of SugarLeaf, the Company now has a U.S.-based hemp
extract supply chain supported by a 24,000 square-foot facility
located in North Carolina. Neptune
and SugarLeaf combined bring decades of experience in the natural
products sector to the legal cannabis and hemp industry. Leveraging
its scientific and technological expertise, The Company as a whole
focuses on the development of value-added and differentiated
products for the Canadian, U.S. and global cannabis and hemp
markets. Neptune's activities also include the development and
commercialization of turnkey nutrition solutions and patented
ingredients such as MaxSimil®, and of a variety of marine and seed
oils. Its head office is located in Laval, Quebec.
Forward Looking Statements
Statements in this press release that are not statements of
historical or current fact constitute "forward-looking statements"
within the meaning of the U.S. securities laws and Canadian
securities laws. Such forward-looking statements involve known and
unknown risks, uncertainties, and other unknown factors that could
cause the actual results of Neptune to be materially different from
historical results or from any future results expressed or implied
by such forward-looking statements. In addition to statements which
explicitly describe such risks and uncertainties, readers are urged
to consider statements labeled with the terms "believes", "belief",
"expects", "intends", "projects", "anticipates", "will", "should"
or "plans" to be uncertain and forward-looking. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
Forward-looking statements in this press release include, but are
not limited to, information or statements about Neptune's outlook,
business plans, its expected use of the net proceeds from its
previously completed private placement offering, the expected
results or benefits from the acquisition, including, but not
limited to, its expected extraction capacity and expansion
opportunities, the expected quality of extracts and range of
products, Neptune's expected strategic positioning, potential
market opportunities and the anticipated growth in the consumer
market, the anticipated consideration owed to SugarLeaf as part of
the acquisition and the assumption by Neptune's management that the
Sugarleaf plant will become operational in accordance with its
current business plans and without unforeseen delays or issues.
The forward-looking statements contained in this press release
are expressly qualified in their entirety by this cautionary
statement and the "Cautionary Note Regarding Forward-Looking
Information" section contained in Neptune's latest Annual
Information Form (the "AIF"), which also forms part of Neptune's
latest annual report on Form 40-F, and which is available on SEDAR
at www.sedar.com, on EDGAR at www.sec.gov/edgar.shtml and on
the investor section of Neptune's website at www.neptunecorp.com.
All forward-looking statements in this press release are made as of
the date of this press release. Neptune does not undertake to
update any such forward-looking statements whether as a result of
new information, future events or otherwise, except as required by
law. The forward-looking statements contained herein are also
subject generally to other risks and uncertainties that are
described from time to time in Neptune public securities filings
with the Securities and Exchange Commission and the Canadian
securities commissions including, in addition to the risks set
forth therein and without limitation, that in the event there are
any delays or issues with the Sugarleaf plant production or the
operations expected to commence therein, the anticipated results
and benefits outlined above may not materialize and such delays and
issues may result in adverse consequences to Neptune. Additional
information about these assumptions and risks and uncertainties is
contained in the AIF under "Risk Factors".
Neither NASDAQ nor the Toronto Stock Exchange accepts
responsibility for the adequacy or accuracy of this release.
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SOURCE Neptune Wellness Solutions Inc.