Ionic Brands (CSE: IONC) announced this morning that it has closed the acquisition of Vegas Valley Growers of Las Vegas, Nevada. Total purchase price for the vertically integrated operation is US$8,870,000. Payment consists of US$7.62 million in cash, and 2.81 million shares at a price of $0.5952, which is a significant premium to yesterdays close of $0.43.
Vegas Valley Growers is a vertically integrated operation located in Las Vegas, Nevada. They currently operate out of a 1,700 square foot facility housed on 3.42 acres. The firm currently has a 60,000 square foot facility under construction for the purpose of manufacturing, which is expected to be completed in the third quarter of 2019. A second 80,000 square foot facility is slated to begin construction in Q4 2019.
“With over 42 million visitors to Las Vegas per year, the VVG acquisition will provide our IonicTM vape and ZootsTM edibles brands valuable exposure to national and international cannabis consumers. The VVG acquisition includes the popular Nevada vape brand: “Vegas M Stick”. VVG offers Ionic Brands vertically integrated operations and distribution into over 75%of Nevada stores.”John Gorst, Chairman and CEO of Ionic Brands
The acquisition includes the popular “Vegas M Stick”, a luxury concentrate product that compliments Ionic’s premium product portfolio. Also to be acquired as part of the Vegas Valley Growers purchase is four cannabis licenses which the firm currently has for cultivation and manufacturing of both medical and recreational cannabis. Licenses for distribution of cannabis product is expected in the current quarter.
Ionic Brands is projecting that the Vegas Valley acquisition will generate US$6.6 million for the firm in 2019, with the assets expected to post gross profits of US$3.1 million and EBITDA of US$2.0 million. Vegas Valley posted revenues of US$2.6 million for the prior year.
Lastly, Vegas Valley currently boasts a market penetration rate of 75% within the state of Nevada. This competitive edge will be utilized for Ionic branded product on a go forward basis, which will also be produced by the Nevada assets.
Ionic Brands closed yesterdays session at $0.43, down $0.01 or (2.27%).
FULL DISCLOSURE: Ionic Brands is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Ionic Brands on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.