Debra Borchardt
Luxury cannabis product company BR Brands LLC has joined forces with long time cannabis beverage company Dixie Brands Inc. (CSE: DIXI.U), (OTCQX: DXBRF). A statement about the merger said that BR Brands will combine operations with Dixie via a reverse takeover. The deal is expected to be completed by the third quarter of 2020.
Valuation
BR Brands will complete a reverse takeover of Dixie at an implied valuation of Dixie of a minimum of $43 million and will convert approximately $6 million of senior secured indebtedness owing by Dixie into subordinate voting shares of the entity resulting from the business combination, such that following completion of the transaction BR Brands and Dixie shareholders will own approximately 80% and 20%, respectively, of the Resulting Issuer.
The Board of Directors of the merged company will have three people from BR Brands and only two from Dixie. Chuck Smith, President and Chief Executive Officer of Dixie, will become President and Chief Executive Officer of the merged company and Andrew Schweibold will serve as chairman of the board of the merged company. Unrelated to the deal and for personal reasons, Dixie’s Chief Financial Officer, Greg Robbins has resigned effective immediately. Dixie’s current Controller, Jared Lanser, will assume the role of interim CFO of Dixie.
“The challenges of the current cannabis-related capital markets have guided Dixie to look for a strategic partner in order to solidify a platform we can leverage for long-term, stable growth for our shareholders. This strategic combination brings two of the most trusted and iconic brands together on one of the broadest manufacturing and distribution platforms in the industry,” said Chuck Smith, President, and CEO of Dixie. “We are very pleased with the fundamentals of the deal as they will strengthen our balance sheet by decreasing debt, improving our cash position, and providing opportunities to enhance revenue growth and capture greater margin.”
Dixie Brands has been a pioneer and leader in the infused-cannabis industry since the launch of its iconic THC-infused Elixir in 2010. Its portfolio includes established brands such as Dixie, Synergy, AcesoHemp, Therabis and a strategic partnership with Herbal Enterprises, LLC, an affiliate of the AriZona brand. BR Brands is the owner of Mary’s Brands including topical brand Mary’s Medicinals. BR Brands’ portfolio also includes three California based brands: Defonce, Beezle, and Rebel Coast.
“BR Brands and its affiliates have had a long-standing relationship with Dixie, rooted in a deep respect for its platform and product portfolio,” said Andrew Schweibold, Chairman of BR Brands. “BR Brands was established to unite premium and emerging cannabis brands under one umbrella, offering unparalleled access to top-tier operating talent and capital expertise. With the consummation of this transaction, the resulting entity is poised to build upon our product portfolio, develop best-in-class IP and expand our geographic footprint, all while remaining laser-focused on continuing to meet the needs of our consumers.”
