Hollister Biosciences Signs LOI to Acquire Venom Extracts, One of Arizona’s Premier Cannabis Extract and Distillate Brands
The Award-Winning Venom Extracts Generated EBITDA of $2.48 Million on Revenue of $16.4 Million Last Year
Hollister Biosciences (CSE: HOLL) (OTC: HSTRF) (FRA: HOB) announced today the signing of a letter of intent (LOI) dated February 20th, 2020, to acquire one of Arizona’s premier extract brands Venom Extracts. Venom Extracts is known throughout Arizona as one of the state’s largest producers of award-winning medical cannabis distillate and other related concentrate products.
Hollister Biosciences is a vertically integrated cannabis branding company that’s quickly making a name for itself in California with the company’s products now in 220 dispensaries throughout the Golden State. The pending deal to buy Venom Extracts looks to be a highly accretive acquisition and once closed, will give Hollister’s fundamentals an immediate boost.
According to Venom Extracts’ unaudited financial statements, the company generated EBIDTA of CDN $2.48 million on revenue of CDN $16.4 million for the year ended December 31, 2019. As part of the standard due diligence process before closing, Hollister will conduct an audit on Venom’s financials but the company is highly confident in the reliability of the numbers prepared by the Venom management team.
Hollister anticipates the acquisition of Venom Extracts will close by March 31, 2020, and estimates the all-stock deal to be worth around CDN $20 million. As per the terms of the agreement, 70% will be paid upfront with the remaining 30% paid out upon milestone achievements. The deal is classified as an arm’s length transaction and Hollister will not be assuming any long-term debt, nor will there be a change in management, the board or any control position.
“Venom has established itself as a leading extraction operation with a prominent brand in the Arizona marketplace. We feel this acquisition will present a great deal of opportunity for synergy between Hollister and Venom, providing avenues for both companies into Arizona, California and additional marketplaces for cannabis products. Venom Extracts has a highly skilled and experienced management team with a track record for operational excellence. This transaction is highly accretive and represents a fundamental part of the future growth of both companies,” stated Hollister Biosciences Founder and CEO Carl Saling.
Venom Extracts is one of Arizona’s premier cannabis extract and distillate brands. The award-winning company is one of the largest producers of medical cannabis distillate in the entire state of Arizona. The company is known for its unparalleled reputation for creating high-quality cannabis concentrate products. Venom’s experienced management team prides itself on being a differentiated extraction company that produces legal marijuana products at a price point that allows retailers to generate higher profits.
Venom is focused on proprietary efficiencies which give the company the ability to produce more product per square foot than its competition while maintaining lower costs and risks than a typical extraction company. The company plans to continue its expansion strategy by entering new legal cannabis markets in the United States.
Mason Cave, CEO of Venom Extracts provided the following statement in regards to today’s announcement:
“We are very pleased to be entering into this transaction with Hollister. The opportunities for resource and capability sharing between the two companies are plentiful. This also represents a more expeditious avenue for us into the large and rapidly growing California marketplace. Hollister has an excellent management team in place and has established itself as a sought-after brand house of popular cannabis and hemp products in California. We feel that our contribution on the extraction side will help diversify Hollister’s product offering and continue to build out the brand equity of both companies across multiple state and eventually global marketplaces.”
HOLL Stock Price Action & Chart
Shares of Hollister’s CSE listed HOLL stock closed trading today at $0.12 per share, down 17.24% on the day. In the United States, the company’s new OTC Markets listed HSTRF stock closed today’s trading session down 8.33% at $0.11 per share. Hollister’s new U.S. listing will open the door to a massive new pool of investors that previously could not easily trade the stock. This should give Hollister’s liquidity a big boost. Overseas on Germany’s Frankfurt Stock Exchange, the company’s German listed shares traded in the opposite direction with the stock finishing the day at $0.935 per share, up 8.72%.
With such great news this morning, you may be wondering why HOLL stock traded down today. You’ll be happy to know that today’s pullback had nothing to do with the company itself. Hollister, along with the entire cannabis sector and almost every stock in North America suffered collateral damage as a result of the massive correction in the global financial markets. Fears over the spread of the new Coronavirus (COVID-19) outbreak and the disruptions to the global supply chain it’s caused have spooked the markets. Over the past two days, the Dow Jones Industrial Average (^DJI) has lost over 1,900 points while the S&P 500 (^GSPC) and NASDAQ Composite (^IXIC) indices have shed roughly 209 points and 610 points, respectively.
Prior to Monday, North American financial markets were trading near all-time highs and long overdue for a healthy correction. If the Coronavirus outbreak and the disruption it’s caused to the global supply chain can be remedied reasonably soon, the current pullback in the markets will serve as an excellent buying opportunity for investors.
Hollister Biosciences is a paid client of The Cannabis Investor.
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