Gateway to the UK
- $3.43M Market Capitalization
Vejii Holdings Ltd. (VEJI.C) announced today that it has signed a non-binding Letter of Intent (LOI) dated May 2, 2022, with Frozenly Limited Inc. Through this LOI, Vejii is contemplating the acquisition of all of the issued and outstanding shares from the shareholders of Frozenly. If completed, this will expand the Company’s footprint in the United Kingdon (UK), representing a significant milestone for Vejii.
“Launching into the UK market has been a stated objective for Vejii since our inception. We believe that the acquisition of Frozenly and the leveraging of Frozenly’s digital platform and distribution network in the UK would be a critical and exciting milestone for the Company as we plan our continued expansion into the European Union and other key strategic geographies,” commented Darren Gill, President and COO of Vejii.
So, who is Frozenly and why should I care? Similar to Vejii, Frozenly has established itself as a marketplace for plant-based foods in the UK. Additionally, the company has built a cold chain distribution platform similar to Vejii’s existing business in both the United States (US) and Canada. More importantly, Frozenly owns and operates MightyPlants.com (“Mighty Plants”), an e-commerce platform and marketplace.
Mighty Plants possesses both a full production site and a supermarket listing, making Frozenly that much more of an attractive acquisition target. Mighty Plants offers a wide variety of plant-based options with a focus on frozen products. One of Mighty Plant’s most popular products is Fravocado, a dairy-free ice cream brand made from coconut milk and avocado. While I don’t know how to feel about avocado-based ice cream, don’t knock it until you try it, right?
The company also acts as an agent for a variety of brands, both big and small, to provide direct-to-consumer (D2C) order fulfillment services and sample distribution through its inventory consignment model, comparable to Vejii Fulfillment Services (VFS). With this in mind, Mighty Plants ships directly to consumers utilizing its insulation made from recycled plastics, demonstrating a concern for environmentalism and sustainability.
Now, let’s talk about what really makes Frozenly such an attractive acquisition target. As previously mentioned, Frozenly has established itself as a marketplace for plant-based foods in the UK. Keep in mind that the UK represents one of the strongest global markets for the plant-based industry. In fact, a report by Mintel found that the sale of meat-free products in the UK grew substantially between 2014 and 2019.
To be more precise, sales of meat-free products in the UK saw a 40% growth rate from approximately £582 million in 2014 to approximately £816 million in 2019. By 2024, this segment is expected to reach a value in excess of £1.1 billion, demonstrating a growing preference for meat-free alternatives in the UK. In particular, the UK plant-based milk alternatives market was valued at £260 million in 2019 and is projected to more than double, reaching roughly £565 million by 2025.
We believe that the acquisition of Frozenly by Vejii would enable local brands that Frozenly already serves to expand across Vejii’s US and Canadian platforms, and Vejii would be able to leverage its brand partners into the UK market as well, we are excited to bring our business together and leverage the natural synergies that already exist” said Kory Zelickson, CEO of Vejii.
This bodes especially well for Mighty Plants’ expansive offering of plant-based milk alternatives. Moving on, the acquisition of Frozenly will provide Vejii with a centrally located distribution center in the UK. This would enable the Company to deliver frozen products D2C across the country with same-day service. Sweetening the pot further, this acquisition will allow Vejii to bring its North American brand partners into the UK market and vice versa.
Acquisition Terms
- at the closing of the Proposed Transaction, £1 million in shares of Vejii based on a deemed price of the greater of (a) C$0.25 per Vejii Share, and (b) the market price of the Vejii Shares on the date of announcement of the Proposed Transaction
- over the three-year period following the Closing, £1 million in Vejii Shares, subject to earn-out milestones based on the financial performance of Frozenly, including revenue and EBITDA targets, based on a deemed price equal to the market price of the Vejii Shares on the date the applicable milestone is achieved
The anticipated purchase price of Frozenly shares is £2 million, payable to its shareholders. Any Vejii Shares issued to Frozenly’s founders, Rebecca Osborne and Gabriel Osborne, will be subject to contractual resale restrictions agreed to by the parties. Following the closing of the acquisition, Frozenly will become a wholly-owned subsidiary of Vejii and will continue to be managed by Rebecca and Gabriel.
Vejii’s share price opened at $0.14 today, up from a previous close of $0.13. The Company’s shares were down -23.08% and were trading at $0.10 as of 10:47 AM EST.
Full Disclosure: Vejii Holdings Ltd. (VEJI.C) is a marketing client of Equity Guru.
