New Age Beverage Corporation has finalized the merger with a Utah-based lifestyle and beverage company, Morinda Holdings, which makes canabidiol (CBD) infused drinks. The merger is significant in the wake of President Donald Trump signing the Agriculture Improvement Act 2018 (Farm Act) which legalizes hemp by removing it from Controlled Substances Act. Hemp, although a type of cannabis plant, contains only 0.3 % THC, an intoxicant, and more canabidiol (CBD) which has proved to have many medical health benefits.
The merger aims to tap the new market opportunity by the legalization of commercial production of CBD by creating a $300 million in net revenue, adjusted EBITDA of $20 million. $200 million in net assets and $40 million in working capital of the new company will ensure swift navigation in many channels for selling its products. It will expand NEBV’s market access and infrastructure.
The terms of the deal are in the favor of both parties, where Morinda has promised to bring $25 million in working capital by 2020, while NABC on their end will provide $15 million one-time payment to Morinda’s former owners if Morinda achieves the target of $20 million in EBITDA by 2019.
The new company will operate in Shanghai, Taipei, Tokyo, and Stockholm along with 20 other countries with central headquarters in Denver, Colorado. The New Company has ambitious goals to become the largest healthy beverage company in the world. Morinda started its journey in 1993 when the vast health benefits of noni fruit were discovered by its food scientists.With 25 years of experience in health beverage industry, the merger with NEBV and legalization of commercial production of CBD will be the new turning point for the company.
New Age’s national retail distribution network will help Morinda expand its new Noni + Collagen brand globally. The company is working relentlessly in integrating the brand portfolio. New Age CEO Brent Willis is confident about the company’s strategy and plans for 2019. Individual investor sentiment is very positive as shown by Tiprank analytics. Based on 4 Wall Street analyst ratings for NEBV (wall street NABC), it is a ‘Strong Buy’ with an average price target of $6.67.
The new company is looking to transform the health beverage industry radically in the next couple of years.