PowerBand Solutions (TSXV: PBX) this morning announced that it has received exchange approval for its previously announced acquisition of 15% of CB Auto Group Inc. The acquisition is key for PowerBand, whom will see the firms 67 million-wide membership be directed to DRIVRZ for the purchase of new and used vehicles on an exclusive basis.
Originally established in 2016, the CB Auto Group is focused on providing union members and their families access to what is referred to as the Union Auto Program. The program offers free benefits, car buying services, fair pricing and protective products in a transparent manner, intended to assist its membership with purchasing or leasing a new or used vehicle.
The firm collectively has amassed access to 43 million union members and their families within its direct customer base. The firm has also established access to a further 24 million affinity members from other associations within its customer base, bringing its total clientele to over 67 million.
The transaction entered into by PowerBand will see the firm amass a 15% stake in the entity over a period of seven months, for total consideration of US$5.0 million. The first payment of US$500,000 was made on November 27, along with the issuance of 750,000 common share purchase warrants that are valid for a period of three years and exercisable at a price of $0.30 per share, for an initial 10% of the total stake PowerBand is taking in the company.
The following additional tranches are set to occur in connection with the arrangement.
- December 31, 2020 – US$1.5 million payable in cash for an additional 30% of the final stake in the company.
- March 31, 2021 – US$1.5 million payable in cash for an additional 30% of the final stake in the company.
- June 30, 2021 – A final US$1.5 million payable in cash for an additional 30% of the final stake in the company.
PowerBand also retains an option to acquire a further 15% of CB Auto Group that is valid for a period of 18 months following the November 27, 2020 closing. The additional 15% can be acquired based on a valuation of US$40.0 million for CB Auto Group.
Full integration between the CB Auto Group and PowerBand’s DRIVRZ platform is anticipated in the “very near future,” as per CEO Kelly Jennings.
PowerBand Solutions last traded at $0.21 on the TSX Venture.
FULL DISCLOSURE: PowerBand Solutions is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover PowerBand Solutions 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.