TGOD (TGOD.T) closes acquisition of European CBD oil manufacturer, HemPoland

The Toronto Stock Exchange has approved TGOD’s (TGOD.T) acquisition of HemPoland, a Polish CBD-oil manufacturer which is TGOD’s first European subsidiary.

TGOD’s acquisition, alongside its announced $75 million bought deal, were credited for the market’s mounting excitement about the company’s future prospects.

HemPoland was the first Polish company to produce state-sanctioned hemp and derivative CBD products.

Brian Athaide, TGOD’s CEO applauded HemPoland’s “proven” product development abilities, adding that his company was “incredibly pleased with this transaction, a key milestone in our long-term acquisitions strategy.”

Transaction highlights according to TGOD:

  • Acquisition cost of US$7.75 million in cash and 1,968,323 restricted TGOD shares currently worth US$7.75 million (~CAD$20.4 million combined) with an additional US$10.3 million (CAD$13.5 million) cash investment for rapid European expansion
  • Additional performance based incentives of up to US$12 million (CAD$15.8 million) for delivery of US$32 million (CAD$42.1 million) of EBITDA in fiscal 2021
  • European gateway with distribution channels to over 750 million people and sales in over 700 locations across 13 countries
  • Premier selling CBD oil brand “Cannabigold”, a recognized leader in the EU
  • 32,000 kgs of dried flower production from 1,250 acres of cultivation
  • Leading innovative organic brand with diverse, novel product offerings and unique IP

HemPoland

The acquisition gave TGOD access to a vertically-integrated hemp cultivation company which has, thanks to its distributors from Austria to Slovenia, proven access to Europe’s nearly 750 million residents.

HemPoland has over 1,250 acres of farmland for cultivation and it produced 32,000 kilograms of dried organic flower in 2017.

The company uses an advanced ‘supercritical CO2 extraction’ method to produce their hemp oils, a technique Hemp Gazette said is becoming “the preferred method of extraction in the medical cannabis and therapeutic hemp industries; particularly with larger commercial operations.”

Supercritical liquids can pass through porous solids and also dissolve materials, making them ideal as a solvent. The “tunability” of supercritical CO2 extraction enables targeting maximum outputs of cannabidiol depending on the type and quality of cannabis material being used; while keeping  undesirable compounds such as chlorophyll out of the product.

TGOD hints at beverage expansion

In the original August press release announcing the acquisition, Athaide included this quote about his TGOD’s future expansions:

“Gaining market share with CBD products now, in the EU, with over 700 locations allows TGOD to establish immediate brand awareness across all verticals including infused beverages.”

Cannabis-derived drinks have attracted significant interest from alcoholic beverage companies in recent months.

Heineken (HEINY.OTC) acquired the Lagunitas Brewing Company in 2017, though the LA Times reported that the company has developed a cannabis-esque beverage which was only released for a limited time.

Lagunitas Brewing Co. last week released its SuperCritical Ale, a hoppy beer that is brewed with terpenes, aromatic compounds of essential oils that are extracted from some plants, including cannabis and hops. The brew, available only in select California locations for a limited time, contains no THC, the chemical that triggers psychoactive effects.   

Furthermore, Molson Coors (TPX.B) partnered with Hydropothecary (HEXO.T) while Canopy Growth’s (WEED.T) received a $5 billion investment from Constellation Brands (STZ.NYSE).

To paraphrase Equity Guru’s Chris Parry, someone will end up doing a deal with Red Bull, or Monster or Budweiser eventually. It’s imperative for cannabis companies to get their beverage development off the ground so they can get into the conversation for such a partnership.

Back to hemp, here’s a quick recap:

  • Aurora bought Hempco to lock down the hemp market that hadn’t yet really evolved yet, legally, until a few days ago.
  • TGOD bought HemPoland to lock down the other side of the world’s hemp market.
  • Aurora owns a chunk of TGOD
  • Enough said

FULL DISCLOSURE: TGOD is an Equity.Guru marketing client.

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

The Green Organic Dutchman

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