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Strategic acquisition to help The Green Organic Dutchman grow, diversify and innovate

Nov 2, 2021
TGOD offers certified organically grown cannabis focused on the health and wellness market and, in Canada, sells dried flower, cannabis oil, hash, vapes, organic teas and dissolvable powders, ...

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Cannabis producer The Green Organic Dutchman Holdings Ltd. (TGOD) has reached an agreement to acquire all issued and outstanding shares of Galaxie Brands Corporation, with the initial share consideration valued at $21 million.

TGOD offers certified organically grown cannabis focused on the health and wellness market and, in Canada, sells dried flower, cannabis oil, hash, vapes, organic teas and dissolvable powders, notes a statement from Mississauga, Ont.-based TGOD.

Galaxie Brands, for its part, is a licensed producer with a 26,000 sq. ft. facility in Ontario that has full cannabis 2.0 capabilities. It also has an exclusive joint venture in Canada with a major U.S. edibles brand, identified by Marijuana Business Daily as Oregon-based Wyld.

TGOD reports that after acquiring all Galaxie shares, the company will issue $21 million worth of TGOD shares. A third of these will be placed into an indemnity escrow account and the remainder will be subject to an escrow agreement, “whereby one sixth of these shares will be released every four months.”

The deal could increase by $15 million in shares if financial milestones are achieved by the end of next year.

The transaction is scheduled to close on or about Nov. 15, 2021, subject to customary closing conditions and covenants.

While TGOD will acquire all Galaxie shares, the latter will remain as a wholly-owned subsidiary of the former and licence holder for the current Galaxie Facility.

TGO reports that the agreement significantly expands and diversifies the company’s current product portfolio.

Here at home, “TGOD will benefit from improved regional distribution across Canada,” providing product expansion capabilities into B.C. for its brands and into Quebec for Galaxie’s existing brands.

Additionally, the statement notes, the acquisition will allow for increased scale and expanded operating capabilities in verticals, “with the ability to accelerate entry into the U.S. market.”

Furthermore, “the transaction is expected to achieve significant cost synergies through selling, general and administrative expense reduction through combining activities, supply chain and distribution optimization through economies of scales, combined research and development activities through leveraging both entities, and a general overhead reduction,” the statement adds.

“We are excited to continue to execute on our growth plans,” Sean Bovingdon, CEO and interim chief financial officer of TGOD, says in the statement. “We believe our complementary brands and consumer bases will result in stronger revenues and overall financial performance for TGOD, while preparing for a future expansion to the U.S.” Bovingdon points out.

Thrilled to join the TGOD team, current Galaxie CEO Angus Footman says that beyond accelerating growth plans and expanding product portfolios, “we share with the TGOD team a focus on environmental stewardship, social responsibility and sound governance.”

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