GreenSpace Brands Inc., a developer and seller of premium natural food products, has announced that it has signed a share purchase agreement to acquire all outstanding shares of Love Child (Brands) Inc. (“Love Child”), an organic infant and children’s food developer and distributor.
“This is a strategic and synergistic acquisition with a shared focus on creating innovative, high quality natural products for children. GreenSpace has been growing at an average of 159 per cent year-on-year since January 2015, and adding a larger business like Love Child, with their rapid growth rate in a complimentary product category, puts us in a great position for continued significant growth,” says Matthew von Teichman, President and CEO of GreenSpace Brands Inc. “We are also excited to welcome Love Child’s talented team, who has done a remarkable job building their diverse product offering and brand. There is a great opportunity to expand the brand within North America utilizing our shared resources and expertise.”
Love Child, which was featured prominently on the CBC show Dragons Den, has had consistently strong revenue growth since it started operations in 2013. Last fiscal year Love Child had net revenue of $5.0 million, an increase of 213 per cent over the previous year.
“Our commitment to create honest, pure and delicious foods that includes nutritionally-rich and natural ingredients have allowed us to differentiate Love Child in the North American market,” says Leah Garrad-Cole, founder of Love Child. “GreenSpace is a perfect home for the Love Child brand with their commitment to continue to bring innovative nourishing products to parents in North America and broadening our development and retail capabilities. John and I are excited to join the GreenSpace team and look forward to our ongoing leadership of the Love Child brand.”
Under the terms of the share purchase agreement, on closing GreenSpace expects to pay the vendors of Love Child $3 million in cash and issue 1,190,476 common shares in GreenSpace, determined by dividing $1.25 million by $1.05 per share, subject to TSX Venture Exchange approval. The share purchase agreement also contemplates the issuance of warrants on closing that will be exercisable if the Love Child brand achieves certain revenue thresholds. The share purchase agreement further contemplates that if the Love Child brand achieves certain revenue thresholds two years following closing, an earn-out of GreenSpace shares will be awarded.
Love Child has total assets of approximately $2.5 million and total liabilities of approximately $2.1 million, which is inclusive of $1.8 million of debt that will be assumed by GreenSpace as part of the acquisition.
GreenSpace also plans to complete a non-brokered equity financing for common shares in the capital of GreenSpace at a price of $1.05 per common share for a dollar amount to be determined. Net proceeds of the equity financing will be used for the acquisition of Love Child. Completion of the equity financing is subject to customary conditions including TSX Venture Exchange approval.
GreenSpace expects to close these transactions at the end of September or early October.
