Neptune Wellness (TSX: NEPT) (NASDAQ: NEPT) appears to be pivoting its business model yet again. The CBD-turned-Covid-19 focused firm is now getting into the world of organic plant-based food.
The company this morning announced that it has acquired a controlling interest in Sprout Foods, an organic plant-based baby food and toddler snack company. The interest is reportedly being acquired via a purchase from that of Morgan Stanley Expansion Capital, whom now will become a major shareholder of Neptune under the terms of the transaction.
Sprout reportedly had US$28.0 million in annual net revenues last year, with the company stating that it is one of the fastest growing organic brands on Amazon, wher it holds the fourth position in terms of top selling organic baby food products. The acquisition was justified by the company by stating that it continues along the path of the firm focusing its efforts on consumer packaged goods.
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Under the terms of the transaction, Neptune is to pay US$6.0 million in cash and issue 6.7 million common shares with a value of US$12.0 million, in exchange for a 50.1% interest in Sprout Foods. The company is also guaranteeing a note worth US$10.0 million by Sprout to that of Morgan Stanley Expansion Capital. Sprout’s current management team will remain in place.
Neptune Wellness last traded at $3.32 on the TSX.
Information for this analysis was found via Sedar and Neptune Wellness Solutions Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
