CBD heavyweight Charlotte’s Web (TSX: CWEB) said it has doubled its U.S. market share lead by scooping up CBD topical specialist Abacus Health Products, Inc. (CSE:ABCS).
The Colorado CBD company announced Monday it’s set to acquire Rhode Island-based Abacus Health in an all-stock deal worth $99 million.
Abacus is backed by former NFL star linebacker Rob Gronkowski and the company sells 50 different hemp-derived CBD topical products — many under its CBDMedic brand — in 12,000 different stores across the U.S.
Combined, Charlotte’s Web said the merger deal will create the world’s largest hemp CBD company that owns 35 per cent of the U.S. cannabidiol market.
Charlotte’s Web sells CBD-infused pet products, edibles and topicals in 11,000 U.S. retailers. Accounting for overlap, the two companies will combine to have products inside 15,000 locations, while having access to Abacus Health’s large network of health care practitioners.
“Because most of Abacus’s products are positioned in adjacent categories, our combined distribution reach has limited shelf overlap,” CWEB CEO Deanie Elsner said in a statement.
“Together we are the most developed CBD company across every channel and segment and positioned to accelerate our growth and extend our market share.”
— Charlotte's Web (@charlottesweb) March 23, 2020
Elsner added the post-merger company will consolidate production and sales infrastructure, increasing economies of scale, lowering costs and reaching new markets in the process.
On pro forma basis, the company’s cash position is an estimated US$90.4 million, as of Dec. 31, to fund further expansion.
The deal has been approved by both companies’ boards of directors, but it still requires a go-ahead from Abacus shareholders who are set to vote in the near term. The companies expect the deal to close in the second quarter of 2020.
Abacus shareholders will receive 0.85 of a common share of Charlotte’s Web for each share held. The exchange ratio implies a price per Abacus Share of $4.39, based on the 10-day volume weighted average price of $5.17, representing a premium of 38 per cent.
Charlotte’s Web will host a conference call tomorrow at 8:30 a.m. Eastern Time to discuss more details of the deal, after the company reports its financials for the fourth quarter and year ended Dec. 31, 2019.
Read more: Rob Gronkowski teams up with CBD company
Top image via Charlotte’s Web