Impressive acquisition, kudos to new mgmt.Full news release; Namaste to buy VaporSeller platform for cash, shares
2016-04-14 17:41 ET - News Release
Mr. Sean Dollinger reports
NAMASTE ENTERS BINDING LETTER OF INTENT TO ACQUIRE LEADING US VAPORIZER E-COMMERCE PLATFORM
Namaste Technologies Inc. has entered into a binding letter of intent with Haze Industries Inc. for the purchase of certain assets of Haze representing its VaporSeller business. VaporSeller is an e-commerce platform for the retail distribution of vaporizers with a substantial presence in the United States. Estimated by management to be one of the largest e-commerce distributors of vaporizers in the United States, VaporSeller generated an unaudited revenue of US$3.4 million in 2015. The Transaction is accretive in terms of revenue and pre-tax earnings and approximately doubles the trailing twelve month revenue of Namaste.
This acquisition is consistent with Namaste's acquisition growth strategy and represents the Company's first-mover advantage as a consolidator of the fast growing and fragmented vaporizer industry. With an international presence established, this acquisition represents Namaste's strategic entry into the United States, the largest market for vaporizers and accessories globally, and provides Namaste with the scale and distribution channels to further secure commercial partnerships with leading product manufacturers.
The acquisition of VaporSeller also provides Namaste with a distribution list of over 150,000 retail purchasers of vaporizer products, which Namaste will utilize to distribute its existing product portfolio including the Guru , Namaste's proprietary vaporizer that works seamlessly with dry herbs, concentrates and liquids.
Transaction Terms
Pursuant to the terms of the Agreement, Namaste will acquire the VaporSeller assets from Haze in exchange for cash, shares and an earn-out. Financial terms of the transaction are as follows:
- US$500 thousand in cash upon closing of the Transaction;
- 5,000,000 shares of Namaste;
- US$1.5 million of earn-out cash payments over 3-years, subject to certain performance criteria including operational controls on revenue and margins;
- and US$89 thousand annual management contract during the earn-out period.
Conditions of Closing
1. Namaste and Haze have agreed to proceed diligently and in good faith to: (a) negotiate and settle the terms of definitive documentation for execution on or before May 30th, 2016; and (b) complete the Transaction not later than June 30th, 2016 .
Conditions to closing of the Transaction include:
- Receipt of all director and requisite regulatory approvals relating to the Transaction, including without limitation, CSE approval if required;
- Negotiation and execution of definitive transaction documents, including but not necessarily limited to, an asset purchase agreement and sales and consulting agreement;
- Completion of financial and legal due diligence by Namaste; and
- No material adverse change shall have occurred in business, results of operations, assets, liabilities, financial condition or affairs of VaporSeller, financial or otherwise, between the date of signing the Agreement and the completion of the Transaction.
Management Commentary
Mr. Sean Dollinger, CEO of Namaste, comments: "This acquisition represents a significant step forward for Namaste. We have effectively secured one of the top e-commerce platforms for the distribution of vaporizers in the United States and demonstrated our team's ability to source and structure value creating transactions for shareholders. This acquisition doubles the financial profile of our company and represents the first of multiple opportunities we have identified to expand through acquisition. We look forward to continuing to work with Haze to complete this transaction and collectively sharing the benefits of our business relationship."
About Haze Industries Inc.
Haze Industries, Inc., a privately owned entity, was founded in 2010 and has quickly become a thought-leader in the vaporizer industry. Based in Atlanta, Georgia, Haze operates sales and distribution channels in the industry, including VaporSeller, one of the leading online sales platforms in the United States, focused on the best-selling brands sourced from leading US and international manufacturers. Haze is comprised of industry experts with backgrounds in business management, design and manufacturing, computer programming, e-commerce, and US sales, distribution and fulfillment.
We seek Safe Harbor.