Under a letter of intent, iAnthus agreed to acquire 100% of the equity interests in CBD For Life in return for 2,529,863 common shares.
Based on a fixed share price of US$5.41, the purchase price will be $13.7 million.
At the closing of the transaction, iAnthus also expects to repay the outstanding debt and related accrued interest of CBD For Life of around $2.0 million in cash.
The parties expect to enter into a definitive agreement in the second quarter of 2019. There can be no assurances that the transaction will be completed as proposed or at all, iAnthus said.
CBD For Life
CBD For Life was launched in February 2016 by Beth Stavola and Julie Winter.
CBD For Life saw an increase in interest from mainstream retailers in the first quarter of 2019 following the passage of the Farm Bill. The company is currently distributing to 750 retail locations and actively on-boarding approximately 25 new locations per week with a dedicated sales channel working with national retailers.
The product lineup includes CBD-infused topicals, tinctures and sprays made for targeted pain relief ranging from muscle soreness to head-aches; and formulas blending essential oils and CBD extract into lotions, creams, and hair products designed to improve rejuvenation and restore moisture.
According to industry experts, retail sales of CBD consumer products are estimated to have been between US$600 million and US$2 billion in 2018. The CBD market is projected to generate US$16 billion in retail sales by 2025.
Research has shown that nearly 7% of the U.S. population in January of 2019 reported using CBD as a supplement, and that number is expected to grow to at least 10% by 2025.
Through a partnership with iAnthus, CBD For Life plans to expand its existing wholesale and retail platform.
“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,” Hadley Ford, the CEO of iAnthus, said in a statement.
“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,” Ford added.