The companies signed a binding letter of intent to formulate a deal. Under the plan, Grown Rogue will acquire the company’s assets, including real estate, intellectual property and other assets, for USD$3 million, subject to adjustment.
Decibel Farms Acquisition
Decibel is a family owned five-acre, sun-grown and greenhouse farm located in the Applegate Valley in the heart of Southern Oregon. It has a 2,500 square foot processing center in Medford. The company has built a sustainable cultivation facility that utilizes biological cultivation practices and has garnered several prestigious quality awards. Decibel also distributes award-winning infused pre-rolls called “Decibel Louds” and award-winning solventless extracts called “Decibel Dabs”. Its owners Shawn Bishop and Buddy Wilson are veterans of cannabis cultivation.
Obie Strickler, the CEO of Grown Rogue, states that his company “is continuing to see significant month over month sales growth, such that demand for our award-winning products is surpassing our current capacity to deliver in Oregon.”
“This acquisition addresses this demand by immediately adding Decibel’s inventory valued at more than US$1 million wholesale to Grown Rogue’s supply. The acquisition also adds another well respected brand into the Grown Rogue portfolio of brands, enabling us to continue growing our market share. Decibel will expedite our ability to ramp up product supply by adding Decibel’s 40,000 sq ft cultivation and manufacturing capacity, as well as a very experienced management to the Grown Rogue leadership team,” Strickler adds.
Upon closing of the transaction, Shawn Bishop will be appointed vice president of manufacturing for Grown Rogue and Buddy Wilson will lead the company’s sales team as vice president of sales.
The transaction will be structured as a tax-free merger, under which Decibel will merge with and into Grown Rogue Gardens, a wholly-owned indirect subsidiary of Grown Rogue, pending final due diligence and a definitive merger agreement.
The real estate property of Decibel will be acquired by GRU Properties, a wholly-owned indirect subsidiary of Grown Rogue, under a customary commercial real estate acquisition agreement.
The consideration to be paid to the shareholders of Decibel will consist of: USD$2 million of common shares of Grown Rogue, and (ii) up to an additional USD$1 million of common shares based on the completion of certain business and operational milestones achieved by Grown Rogue.
“Merging operations with Grown Rogue is an incredible opportunity for both companies,” Bishop, the founder and CEO of Decibel states. “We’re very excited to be joining such a skillful and like-minded team with the ability to scale our collective efforts into many other states and markets. The thoughtful approach to strategic expansion demonstrated by Obie and his team inspires great confidence.”
The closing of the deal will be subject to, among other things, satisfactory completion of due diligence by Grown Rogue, regulatory approvals, and delivery of a definitive merger agreement and other related transaction documents by June 30, 2019.