Green Organic Dutchman Holdings Makes a Big Bet on CBD Oils

The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) closed its acquisition of HemPoland, which manufacturers premium organic CBD oils

SmallCapPower | October 3, 2018: The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) Tuesday announced that it has closed its previously-announced acquisition of HemPoland. The Company paid ~ US$7.75 million in cash and issued 1.96 million restricted TGOD shares worth ~ US$7.75 million to be escrowed for a term of three years from closing. Also, part of the transaction was a US$10.3 million cash investment for rapid European expansion and performance-based incentives of ~US$12 million for delivery of US$32 million of EBITDA in fiscal 2021.

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HemPoland is a leading European manufacturer and marketer of premium organic CBD oils and was the first company in Poland to obtain a state license to grow hemp and manufacture CBD oil products. The deal provides Green Organic Dutchman Holdings access to HemPoland’s vast distribution network, premium Cannabigold brand, state-of-the-art hemp oil extraction technologies, and provides access to European market for strategic deals.

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Green Organic Dutchman Holdings CEO Brian Athaide said, “HemPoland has proven an ability to execute through quality product development and strong brand awareness. We are incredibly pleased with this transaction, a key milestone in our long-term acquisitions strategy. The acquisition is accretive to our shareholders, delivers immediate revenue, and opens a new vertical for TGOD. We’re incredibly excited to have such an innovative and strong entrepreneurial team join our TGOD family.”

In another recent development, Green Organic Dutchman Holdings announced on Monday that it has signed an agreement with a syndicate of underwriters led by Canaccord Genuity Corp., in which the underwriters have agreed to purchase, on a bought-deal basis pursuant to the filing of a short form prospectus, an aggregate of 10.95 million units at a price of $6.85 per Unit for total gross proceeds to the Company of $75 million. Each Unit will consist of 1 Common share of the Company and 1 Common Share purchase warrant. Each Warrant will be exercisable to acquire one Common Share for a period of 30 months following the closing of the Offering at an exercise price of $9.00 per Warrant Share. The Company has granted the Underwriter an option to purchase up to an additional 1,642,500 Units at a price of C$6.85 per Unit, exercisable at any time, for a period of 30 days after and including the Closing Date. The proceeds will be used primarily to fund international expansion.

Green Organic Dutchman Holdings trades at a market capitalization of C$1.51 billion with a price-to-book multiple of 4.58x.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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