USA – Gabriella’s Kitchen Inc., an innovative and leading-edge cannabis wellness company, has entered into a binding agreement to acquire all of the shares of Sonoma Pacific Distribution.
Sonoma is California’s premier independently owned cannabis distribution and marketing company, with a distribution license for the State of California, issued by the Bureau of Cannabis Control.
According to the company, the Sonoma shareholders will receive common shares in GABY equal to 1.0x the verifiable licensed revenue of Sonoma for the fiscal year ended December 31, 2018.
This was calculated as at the Company’s volume-weighted average price for the 20-day period ending at the market close on October 23, 2018, the date the transaction was announced.
It is anticipated that the total value of the GABY Shares to be issued under the Agreement at closing will range between US$3.5 million and US$5.5 million.
The GABY Shares will be immediately issued in escrow based on the estimated revenue of US$5.5 million, pending verification by GABY’s auditors and shall be releasable from escrow on the day following the public release of GABY’s fiscal 2018 year-end financial statements based on the actual 2018 Revenue.
If the 2018 Revenue exceeds the estimate of US$5.5 million, additional GABY Shares will be issued at the VWAP for the 20-day period ending at the market close on the Release Date.
The Sonoma shareholders will be further entitled to an earn-out equal to 0.35x the difference between the 2018 Revenue and the verifiable licensed revenue of Sonoma realized as at December 31, 2019.
The earn-out will be paid in additional GABY shares with the value calculated as at the Company’s VWAP for the 20-day period ending on the day following the public release of the consolidated Sonoma and GABY fiscal 2019 year-end financial statements.
The proposed acquisition of Sonoma, coupled with GABY’s previously announced acquisition of The Oil Plant and its manufacturing license, allows GABY to control the path from product conception to consumer, giving the Company a portal to directly reach its customers.
It also affords GABY ownership of its manufacturing and distribution infrastructure in California, being one of the most significant cannabis markets in the world, positioning the Company for present market opportunities as well as larger future market opportunities.
Should federal legalization in the United States remove the barriers to inter-state commerce, GABY will have the infrastructure needed to quickly expand into the remaining US states.
As part of the transaction, Mr. Aaron Browe, Founder and President of Sonoma, will join GABY as the Senior Vice President responsible for Global Distribution of GABY’s cannabis-infused product portfolio.
In this capacity, Mr. Browe will oversee the internal and external sales teams in the infused channel markets in the US and will immediately start the process of establishing distribution relationships in Canada and globally.
Ashley Oldham, current COO of Sonoma, will continue day-to-day management of Sonoma under the continued oversight of Mr. Browe.
“In our quest to build the category leader in cannabis wellness, it is imperative that we own both our manufacturing and distribution infrastructure in the largest and most significant cannabis and wellness focussed market in the world,” said Margot Micallef, Founder and CEO of Gabriella’s Kitchen.
“By bringing Sonoma Pacific into our family, we have achieved our goal of having a direct link to our customers.
We are also pleased to rely on Aaron’s distribution prowess to partner with other world-wide distributors to build our global footprint working alongside the dedicated team he has built to date.”
“When I founded Sonoma Pacific, I wanted to shape the direction of the cannabis industry to ensure cultivators were treated fairly, dispensaries were serviced professionally and consumers had access to great products.
As an independent distributor in California, the Sonoma team has done that to the degree we could,” said Aaron Browe, GABY’s newly appointed Senior Vice President of Global Distribution.
“With GABY’s capital market savvy, deep experience in building companies, broad distribution infrastructure in the mainstream channel and experienced product development and manufacturing team, Sonoma Pacific is ideally positioned to realize our goal of being a leader in the cannabis space and truly help shape the future of the industry.
We are also excited to work more closely with Mara Gordon, GABY’s Chief Research Officer, who I know well, and to leverage her thought leadership in the cannabis sector. “