Privately held Sera Labs, a leading CBD health and wellness company, announced today that it has entered into a Memorandum of Understanding for a 100% acquisition by CURE Pharmaceutical (OTC: CURR), an innovative drug delivery and development company for a total up-front consideration of $20 million, comprising $19 million in CURE stock at a valuation of $2.75 per share, and $1 million in cash, with an initial, additional commitment of $4 million for working capital in support of accelerating Sera Labs’ growth. The transaction also includes the potential for an earn out of up to $20 million in CURE stock at a valuation of $3.34 per share within two years of the closing of the acquisition, contingent upon Sera Labs achieving certain key financial targets. The structure of the earn out is designed to align risk and reward between CURE stockholders and Sera Labs’ management, with a focus on strong operational alignment and financial execution. The transaction is expected to close, subject to a definitive agreement and customary closing conditions, by the fourth quarter of 2020.
Sera Labs was founded in 2018. Net sales (unaudited) for the most recent quarter ended June 30, 2020, totaled $1.8 million, reflecting a steep sales growth trajectory and early strong reception for its novel products across the CBD-based beauty, health & wellness, and pet product markets. The increase in sales, as projected for the third and fourth quarters and beyond, is subject to this agreement’s new infusion of capital, and attributable to newly signed distribution agreements, the acceptance of additional retailers for CBD, and the explosive growth of Sera Labs’ digital opt-in subscription model, which is just beginning to show rapid growth in line with internal projections.
“Sera Labs has quickly become a standout leader in the CBD industry,” said Nancy Duitch, Sera Labs Founder and CEO. “We attribute our success to capturing a broad distribution network that serves major retailers/distributors and consumers with solution-oriented products and value-driven, trusted brands. The Sera Labs team consists of highly experienced experts who have a track record of creating multiple national brands by utilizing direct-to-consumer marketing to generate recurring revenue. The Sera Labs team has built brands that have generated more than $5 billion in retail sales during the course of their combined careers. We are most excited about the opportunity to vertically integrate with CURE’s domestic cGMP manufacturing and distribution, which will result in a streamlined supply chain. We are confident that with the novel and patented formulation technologies and know-how of CURE, we will be able to accelerate sales growth and achieve consistent profitability much more rapidly than could have been achieved on our own.”
BDS Analytics and Arcview Market Research estimate that the U.S. market for hemp-derived CBD products will exceed $20 billion by 2024.
“CURE’s acquisition of Sera Labs will add a growing brand portfolio and monetization platform that fits remarkably well with CURE’s development capabilities, products, and existing market verticals,” said Rob Davidson, CURE Pharmaceutical CEO. “By integrating Sera Labs’ products and processes with those of CURE’s, and leveraging our cGMP manufacturing facility to realize economies of scale, we will drive improved margins and profitability. This acquisition comes on the heels of our most recent pharmacokinetic study, which showed that our CUREform thin film technology improved cannabidiol bioavailability, and sets the stage for potentially exciting opportunities to apply our innovative dosage forms to Sera Labs’ products. We look forward to joining forces with the Sera Labs team as well as Nancy Duitch’s continued leadership at the helm of Sera Labs and as a key member of CURE‘s leadership team upon closing of the transaction.”
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Source: Biospace
