IAnthus (IAN.C) signs LOI to acquire CBD For Life, but questions remain

Ianthus Capital Holdings (IAN.C) penned a letter of intent to acquire top-ranked, national CBD brand, CBD For Life.

IAN will gain CBD For Life’s existing online client base, 750 retail locations and a dedicated sales channel currently growing at a rate of roughly 25 new locations per week.

The CBD industry will be worth $22 billion by 2022, according to the Brightfield Group.

“Developing a strong CBD strategy is mission critical for cannabis companies to compete on a national scale while simultaneously entering the consumer product and retail marketplace. With the acquisition of a name brand like CBD For Life, iAnthus is well positioned to increase our market share with greater exposure to patients and customers across the country,” said Hadley Ford, chief executive officer of iAnthus.

CBD For Life was founded in 2016 by Beth Stavola and Julie Winter to develop and distribute CBD-based solutions for self-care, beauty and wellness.

The company’s pipeline includes:

  • CBD-infused topicals, tinctures and sprays made for targeted pain relief ranging from muscle soreness to head-aches;
  • Beauty and skincare formulas which blend essential oils and CBD extract into lotions, creams, and hair products designed to improve rejuvenation and restore moisture.

Beth Stavola also sits on the board of iAnthus as their chief strategic officer.

Public companies generally don’t acquire private companies unless they know the risks they’re taking in terms of debt, assets and other tangibles are going to be worth the rewards ahead.

That makes sense in this case.

Stavola knows what’s on the books for CBD For Life, and understands what it can bring to the company in terms of assets and revenue.

These assets include a manufacturing facility in New Jersey, an online store and the previously mentioned distribution footprint. The only visible liability is the $2 million debtload that the company carries that iAnthus will do away with as a provision of the deal.

Meet The 2019 High Times Women of Weed Honorees
Beth Stavola.

They also include a fair amount of positive press coverage.

CBD For Life’s products have been featured in online and print publications including Forbes, Shape, Marie Claire, Women’s Health, Cosmopolitan and Allure.

Stavola herself is a genuine media darling, having been recognized as Inc.com’s top 100 female founders in 2018, as well as being chosen as one of the High Times 21 Women-of-Weed for 2019.

The nugs-‘n-bolts

IAnthus is acquiring 100% of equity in CBD For Life in exchange for 2,529,863 common iAnthus shares at a fixed share price of $5.40.

That comes out to $13.6 million for Stavola and Winter after a little quickie math.

The problem here is that there really is no way for investors to determine if this is a good deal for iAnthus, as CBD For Life will be a private company until the deal closes.

It wouldn’t be worth talking about if there weren’t cannabis companies in the space making shady deals.

That’s probably not happening here by all accounts, but if there’s anything the cannabis industry needs right now it’s more transparency.

There’s evidence that this is an acquisition that will benefit iAnthus and its shareholders, but it’s not entirely unreasonable that investors might be a little gun-shy after the previous year’s shenanigans.

Shares rose CAD$0.01 to end the day at $7.46 per share.

Currently iAnthus Capital Holdings has 136,873,271 issued and outstanding shares with a market cap a little north of $1 billion.

—Joseph Morton

Full disclosure: iAnthus Capital Holdings 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.

iAnthus Capital Holdings

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