Proposed purchase of Cannaray Brands and Love CBD
26/09/2022 07:00
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RNS Number : 5377A Cellular Goods PLC 26 September 2022
The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014, as retained as part of the law of England and Wales. Upon
the publication of this announcement via the Regulatory Information Service,
this inside information is now considered to be in the public domain.
Press release
26 September 2022
Cellular Goods PLC
('Cellular Goods' or 'the Company')
Proposed acquisition of Cannaray Brands Ltd and Love CBD Health Ltd
Board Change
The Directors of Cellular Goods (LSE: CBX), a UK-based wellness company
providing premium consumer products formulated with lab-produced cannabinoids,
are pleased to inform shareholders that the Company has signed a letter of
intent ("LOI") with Cannaray Limited, the owner of Cannaray Brands Ltd &
Love CBD Health Ltd (the "Cannaray Subsidiaries") pursuant to which Cellular
Goods will acquire 100% of the issued share capital of the Cannaray
Subsidiaries ("the Transaction"). Should the Transaction complete, it would
constitute a Reverse Take-Over ("RTO") under the Listing Rules.
Discussions over the transaction are at an advanced stage and Cellular Goods
has conditionally agreed to acquire the Cannaray Subsidiaries for an initial
consideration of £14.2 million, consisting of £1 million in cash, together
with a number of new Cellular shares, which will make Cannaray a 54%
shareholder in the enlarged group. The Company has also agreed to make further
performance-based share payments, conditional on the Cannaray Subsidiaries
achieving various revenue milestones in the first full financial year of the
combined entities. As a consequence, should the Subsidiaries generate over £5
million in revenues within the first financial year, Cannaray will become a
61% shareholder. Should the Subsidiaries generate over £7.5 million, Cannaray
will become a 64% shareholder.
The Cannaray Subsidiaries comprise two leading consumer brands (Cannaray CBD
(http://www.cannaraycbd.com/) & Love CBD (http://www.lovecbd.org/) )
within the UK cannabidiol ("CBD") wellness sector. The brands offer a range of
high-quality ingestible CBD products (oils, gummies, capsules) published on
the UK Novel Foods register and sold through 1,500 retailer outlets and
direct-to-consumer branded websites. The Directors of Cellular consider that
the proposed acquisition will create long term value for shareholders by
bringing together two complementary businesses with significant growth
opportunities, scale benefits and an enhanced market presence with established
brands.
The Cannaray Subsidiaries had combined unaudited revenues of £2.3 million in
2021 and further revenue growth is expected on the back of national TV
advertising, improved D2C online performance, and additional retailer
listings.
Cannaray CBD is the group's flagship brand; it was the first CBD brand to
invest in major brand advertising in the UK, with a national TV and
out-of-home campaign encouraging people to "Join the CBD Revolution". The
brand is sold online at www.cannaraycbd.com (http://www.cannaraycbd.com) ,
Amazon and eBay, and in major retailers across the UK including Tesco,
Superdrug, ASDA, Waitrose, and Harrods.
Love CBD has a loyal and highly engaged consumer base, receiving over 4,600
reviews on Trustpilot and an average score of 4.8 out of 5. The business
includes its own manufacturing facility near Cambridge, UK. The brand is sold
online at www.lovecbd.org (http://www.lovecbd.org) , Amazon, eBay and in
health food stores nationwide.
Should the transaction proceed then Cannaray Limited will appoint the majority
of the ongoing CBX board of directors.
There can be no certainty that the Transaction will proceed and it remains
subject to, amongst other things, entering into a definitive legal
agreement and obtaining all other necessary approvals (if required).
A further announcement will be made in due course.
Board Change
In view of the forthcoming change of the combined companies' management
structure, Anna Chokina has resigned from the Company with immediate
effect. The Board thanks Mrs Chokina for her significant contribution and
strategic leadership of the Company, including the introduction of the
Transaction to the Board.
Darcy Taylor will assume the role of interim CEO and lead the merger
discussions. A proposed new management structure will be announced at the
appropriate time, pending the successful conclusion of the talks.
Darcy Taylor, Non-Executive Chairman of Cellular Goods, commented: "We are
pleased that we have reached this significant preliminary agreement
with Cannaray Limited and look forward to working closely with them to
conclude a transaction. This is an exciting step forward for Cellular Goods.
The Cannaray Limited Board shares our vision of building a market leader
listed on the London Stock Exchange.
"The enlarged company will benefit from a significant increase in group
revenues, market presence, combined portfolio strength of complementary
product lines addressing premium and mass consumer segments, and economies of
scale in marketing, logistics and production. The transaction represents a
significant opportunity for industry consolidation and enhanced long-term
growth potential supported by complementary business fundamentals. The Board
looks to the future with confidence as we continue the path to becoming the
sector leader."
Anna Chokina, outgoing Chief Executive of Cellular Goods, commented: "The
proposed transaction makes a lot of strategic sense by bringing together two
of the most recognised and complementary cannabinoid brands on the UK market.
I am excited for the prospects of the proposed transaction and I am leaving
Cellular Goods with healthy business fundamentals, clear and meaningful
strategy, and a top performing team. I wish the incoming management every
success."
Andrew Garden, Chairman of Cannaray Limited, commented: "This preliminary
agreement is very positive news for our shareholders, as we seek to focus on
the major growth opportunities within the European cannabis market. The
combined capabilities, knowledge, people and brands of the Cannaray
Subsidiaries and Cellular Goods will create a consumer business well placed to
strengthen its leading position into the future.
"Following this transaction, Cannaray Limited's strategy will centre on the
development of prescription-based cannabis for medicinal use in Europe - on
the back of our unique partnership with Walgreens Boots Alliance for cannabis
supply and education in Germany. With the German government having announced
steps to legalise recreational cannabis in the near term, we are also well
poised to galvanise our capital and human resources to be at the forefront of
this multi-billion Euro market as it emerges.
"It has always been the intention of Cannaray Limited to list the business on
a favourable stock exchange. We are excited to list our CBD division on the
LSE via this reverse takeover with Cellular Goods, whilst we continue to
privately build our medical and recreational cannabis divisions in the UK and
Germany. Our intention for the future will be to list on a qualified exchange
favourable for recreational cannabis businesses."
For further information please contact:
Cellular Goods
Darcy Taylor via Tancredi +44 207 887 7633
Chairman
Investor Relations ir@cellular-goods.com
Tennyson Securities
Corporate Broker & Adviser
Peter Krens +44 207 186 9030
Alan Howard
Novum Securities
Corporate Broker
Colin Rowbury
Jon Belliss +44 207 399 9427
Tancredi Intelligent Communication
Media Relations
Helen Humphrey +44 744 922 6720
Charlie Hobbs +44 789 755 7112
cellulargoods@tancredigroup.com (mailto:cellulargoods@tancredigroup.com)
About Cellular Goods PLC:
Cellular Goods is a UK-based wellness company that provides premium products
based on lab-made cannabinoids. It was established in August 2018 to develop
efficacy-led and research-backed cannabinoid-powered wellness products. The
initial focus is on three product verticals: Function Better, Feel Better and
Look Better. These three verticals encompass Cellular Goods' premium CBG
skincare and CBD ingestible and topical athletic recovery products, with the
first products launched in December 2021. The Company's shares are listed on
the main market of the London Stock Exchange. www.cellular-goods.com
(http://www.cellular-goods.com)
About Cannaray Limited:
Cannaray Limited is a leading European cannabis company spanning both medical
cannabis and CBD wellness brands.
Therismos is the company's medical division, which imports and distributes
cannabis-based products for medical use (CBPM) across Europe. Its strategy is
to become the leading European full-service provider of medicinal cannabis
through innovative product solutions, valuable partnerships with strategic
allies, and collaboration with world-class scientists and medical
practitioners. In May 2022, Therismos GmbH signed a transformational category
growth partnership with Walgreens Boots Alliance's subsidiary, Alliance
Healthcare GmbH, for medical cannabis supply and pharmacist education in
Germany.
https://therismospharma.com/ (https://therismospharma.com/)
The company's CBD division comprises two leading British CBD wellness brands,
Cannaray CBD and Love CBD.
Cannaray CBD is the company's flagship CBD wellness brand, founded to make CBD
easy and accessible for millions of new people, with a range of quality CBD
products. Cannaray was the first CBD brand to invest in major brand
advertising in the UK. In 2021 they began a national television and out of
home campaign featuring Brand Ambassador and UK TV and Radio presenter Claudia
Winkleman, who encourages people to 'Join the CBD Revolution'. Cannaray CBD's
product range includes CBD Oil Drops for day and night, Capsules, Gummies and
Muscle Balm. All products are formulated to be effective and enjoyable to use,
triple-lab-tested for purity, and are packaged in the modern, bright, and
eye-catching Cannaray brand colours.
www.cannaraycbd.com (http://www.cannaraycbd.com)
Love CBD is the company's CBD wellness brand designed for CBD enthusiasts and
is one of the original pioneers of the CBD category in the UK. The majority of
Love CBD's product range is produced at its own manufacturing site near
Cambridge, UK, and includes CBD Oil Sprays, Capsules, and topical Balms.
www.lovecbd.org (http://www.lovecbd.org)
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