New Age Beverages Corporation (NASDAQ:NBEV) shares indicated an increase of 4% after the company announced that they were closing on a merger with Morinda Holdings, Inc. The merger is expected to create one of the biggest health beverage companies that is estimated to have a net revenue of $300 million and an adjusted EBITDA of $20 million as well as assets worth $200 million. The merger brings together a portfolio of health beverage companies that have a significant market penetration that includes in-home, traditional retail as well as e-commerce as well as delivery systems. New Age Beverages is expected to benefit from the infrastructure resulting from the merger, and they will have easy market access for their CBD infused beverages globally.
The growth of stock following the merger
The merger was worth $85 million, and this included $10 million in the form of New Age common stock established on a 40-day volume average price that was calculated at $4.96 per share. The volume translated to approximately 2,016,480 shares that were transferred in the merger. The premarket share closing before the merger increased by 4% and the new arrangement is expected to add $25 million to the business from Morinda while by 2020, New Age is supposed to be providing up to $15 million in common stock for a one-time payment.
Market prospects of the merger
The two companies are focused on convergence that will capture an estimated $10 million in revenue synergies and expected costs. The management has equally been reviewing their market as well as convergence work that is focused on the potential of New Age’s sales in the existing product portfolio as well as the impending hemp-infused beverages as a result of the merger.
According to Brent Willis, the CEO New Age Beverages, after the announcement of the merger they have been focusing on securing major retail distribution nationally for its leading brands as well as the progress of Morinda with their latest Noni-Collagen brand. Willis added that the integration of the two companies is well on track and they are confidently looking towards capturing substantial growth in major global markets.
