NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION OVER UNITED STATES NEWSWIRES.
SAN DIEGO, July 20, 2021 (GLOBE NEWSWIRE) -- Salona Global Medical Device Corporation (the “Company”, “SGMD” or “Salona Global”) (TSXV: SGMD) announced today the execution of a non-binding Letter of Intent (the “LOI”) memorializing the terms and conditions of a potential acquisition of a target business (the “Target”).
Under the terms of the LOI, SGMD would acquire 100% of the stock of the Target, a nationwide (U.S.) vertically integrated company founded more than a decade ago with proprietary brands and products specializing in ergonomic equipment and fittings, as well as a wide range of medical tools distributed to physical therapy clinics. According to SGMD’s due diligence, the Target had 2020 unaudited revenue in excess of $11,000,000. In 2020, the Target generated 35% gross profit margins with positive cash flow.
The acquisition, as contemplated, would be highly accretive, with the increase in revenues and profits far outweighing the increase in the shares issued for the acquistion.
If closed, the transaction would provide additional U.S. organic growth opportunities for future acquisition candidates through access to the Target’s large nationwide clinical footprint. Additionally, SGMD plans to expand selected branded products, intellectual property and designs owned by the Target into the European and Global markets.
According to the LOI, the consideration would include a down payment of US$3,200,000 and 3,709,585 restricted (12-month hold) common shares of SGMD (SGMD has approximately 63.8 million common shares outstanding, on a partially diluted basis assuming exchangeable shares of 19.162 million common shares of SGMD) followed by an earn-out payment expected 13 months after the closing estimated to be $1,500,000, split 61.5% cash and 38.5% shares (valued at a 10% discount to the 20-day vwap on the one year anniversary of the close assuming the stock trades above $2 per share). SGMD plans to close this acquisition with existing cash on the balance sheet.
“We are pleased to have executed this LOI to acquire this strategically important company which is another key building block in creating a world-class, fast growing global medical device company,” said Les Cross, Chairman and interim CEO of SGMD. “This company adds several key components to our growth platform: both significant domestic distribution at the clinical level and a small but lucrative group of products that we can extend into the European and global market -- all while being tremendously accretive.”
“With our plan to acquire IP-driven device companies, we stand to benefit greatly with this transaction from their wide base of clinics in the U.S. that could add to our domestic revenue growth,” continued Mr. Cross. “This Target does have certain specialized products that we believe we can extend into the European market, but its main value, besides its margins and cash flow, lies in the access to the top physical therapy clinics in the country. Our plan is always to surround our customer, whether in the U.S. or globally. We remain focused on several potential acquisitions of high-tech IP-driven devices to leverage our platform.”
SGMD is currently negotiating and working on a definitive agreement for the transaction contemplated by the LOI.
For more information please contact:
Les Cross
Chairman of the Board and Interim Chief Executive Officer
Tel: 1 (800) 760-6826
Email: Info@Salonaglobal.com
Additional Information
There can be no assurance that the acquisition contemplated in the LOI will be completed as proposed or at all. Completion of the acquisition contemplated in the LOI is subject to a number of conditions, including but not limited to, negotiation and execution of a definitive agreement and completion of due diligence.
There can be no assurance that any of the potential acquisitions in advanced negotiations will be completed as proposed or at all and no definitive agreements have been executed. Completion of any transaction will be subject to applicable directors, shareholder and regulatory approvals.
The securities referred to in this news release have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This news release does not constitute an offer for sale of securities for sale, nor a solicitation for offers to buy any securities. Any public offering of securities in the United States must be made by means of a prospectus containing detailed information about the company and management, as well as financial statements.
Unless otherwise specified, all dollar amounts in this press release are expressed in Canadian dollars.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian and United States securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to the Company, including: closing of the proposed acquisition; information relating to the business plans of the Company; statements regarding anticipated revenue and positive cash of acquired companies; the Company’s acquisition strategy; future acquisitions and the structure and financing of such acquisitions; information with respect to future growth and growth strategies; the Company’s organic growth plan and strategy and the manner in which the Company proposes to accomplish it; and anticipated trends in the Company’s industry; are intended to identify forward-looking information. All statements other than statements of historical fact may be forward-looking information. Such statements reflect the Company's current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties and assumptions, including: the Company and a target being satisfied with due diligence; the Company successfully negotiating and executing definitive agreements for an acquisition; closing conditions being satisfied or waived; and the Company obtaining all requisite approvals for a transaction. Many factors could cause the actual results, performance or achievements that may be expressed or implied by such forward-looking information to vary from those described herein should one or more of these risks or uncertainties materialize. Examples of such risk factors include, without limitation: credit; market (including equity, commodity, foreign exchange and interest rate); liquidity; operational (including technology and infrastructure); reputational; insurance; strategic; regulatory; legal; environmental; capital adequacy; the general business and economic conditions in the regions in which the Company operates; the ability of the Company to execute on key priorities, including the successful completion of acquisitions, business retention, and strategic plans and to attract, develop and retain key executives; difficulty integrating newly acquired businesses; the ability to implement business strategies and pursue business opportunities; disruptions in or attacks (including cyber-attacks) on the Company's information technology, internet, network access or other voice or data communications systems or services; the evolution of various types of fraud or other criminal behavior to which the Company is exposed; the failure of third parties to comply with their obligations to the Company or its affiliates; the impact of new and changes to, or application of, current laws and regulations; granting of permits and licenses in a highly regulated business; the overall difficult litigation environment, including in the United States; increased competition; changes in foreign currency rates; increased funding costs and market volatility due to market illiquidity and competition for funding; the availability of funds and resources to pursue operations; critical accounting estimates and changes to accounting standards, policies, and methods used by the Company; the occurrence of natural and unnatural catastrophic events and claims resulting from such events; and risks related to COVID-19 including various recommendations, orders and measures of governmental authorities to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelters-in-place and social distancing, disruptions to markets, economic activity, financing, supply chains and sales channels, and a deterioration of general economic conditions including a possible national or global recession; as well as those risk factors discussed or referred to in the Company’s disclosure documents filed with United States Securities and Exchange Commission and available at www.sec.gov, and with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com. Should any factor affect the Company in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, the Company does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.
