Cronos Group Establishes New Growth Opportunity in the United States with Acquisition of Hemp-Based Products Platform
August 02 2019 - 7:00AM
Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (“
Cronos
Group” or the “
Company”) today announced
that it has entered into a definitive agreement to acquire four of
Redwood Holding Group, LLC’s operating subsidiaries (collectively,
“
Redwood”).
Redwood manufactures, markets and distributes hemp-derived
cannabidiol (CBD) infused skincare and other consumer products
online and through retail and hospitality partner channels in the
United States under the brand, Lord Jones™. Redwood’s products use
pure hemp oil that contains natural phytocannabinoids and terpenes
found in the plant.
Redwood was co-founded in 2017 by Robert Rosenheck and Cindy
Capobianco. Following the close of the transaction, Mr. Rosenheck
and Ms. Capobianco will join Cronos Group and continue to lead the
development of the Redwood platform with the support of the current
team, brand names and operating locations remaining in place.
“Rob and Cindy have built a differentiated, best-in-class
platform with hemp-based CBD formulations that stand for quality
and consistency. Our goal is to preserve the integrity of all Rob
and Cindy have created, while also learning from them and
leveraging Cronos Group’s resources to capitalize on the
significant demand for skincare and other consumer products derived
from hemp. Leading the industry forward responsibly and being a
part of the conversation with industry stakeholders remains a top
priority for Cronos Group in this evolving area,” said Mike
Gorenstein, Cronos Group’s Chairman, President and Chief Executive
Officer.
“The inspiration for our company was simple, we wanted to create
a brand we wished we could buy as adult consumers,” said Mr.
Rosenheck. “We chose Cronos Group because they share our vision and
values and will help us continue our mission. We are incredibly
proud of our team and grateful to our customers who are responsible
for our success. Cindy and I look forward to working with Cronos
Group to further extend the love and enthusiasm for our
products.”
Under the terms of the agreement, Cronos Group will acquire
Redwood for approximately USD $300 million, net of Redwood’s
estimated cash and debt and subject to a customary working capital
adjustment as described in the agreement. USD $225 million of the
total consideration (subject to the foregoing adjustments) will be
paid in cash with the balance paid in newly issued Cronos Group
common shares. Cronos Group will fund the cash portion of the
transaction with cash on hand.
The transaction is expected to close in the third quarter of
2019, subject to customary closing conditions and regulatory
approvals. Further information regarding the transaction is
included in Cronos Group’s material change report with respect
thereto, available at www.sedar.com, and in its corresponding Form
6-K, available at www.sec.gov/edgar.
Advisors
Perella Weinberg Partners LP is financial advisor to Cronos
Group, and Sullivan & Cromwell LLP and Blake, Cassels &
Graydon LLP serve as legal counsel. Lazard Ltd. is financial
advisor to Redwood Holding Group, LLC, Jeffrey D. Segal, A
Professional Corporation and Kirkland & Ellis LLP serve as
legal counsel.
About Cronos Group Inc.Cronos Group is an
innovative global cannabinoid company with international production
and distribution across five continents. Cronos Group is committed
to building disruptive intellectual property by advancing cannabis
research, technology and product development. With a passion to
responsibly elevate the consumer experience, Cronos Group is
building an iconic brand portfolio. Cronos Group’s portfolio
includes PEACE NATURALS™, a global health and wellness platform,
and two adult-use brands, COVE™ and Spinach™. To learn more about
Cronos Group and its brands, please visit: www.thecronosgroup.com;
www.peacenaturals.com; www.covecannabis.ca;
www.spinachcannabis.com.
Forward-Looking Statements This news release
contains “forward-looking information” and “forward-looking
statements” within the meaning of applicable Canadian and U.S.
securities laws. All information contained herein that is not
clearly historical in nature may constitute forward-looking
information. In some cases, forward-looking statements can be
identified by words or phrases such as “may”, “will”, “expect”,
“plan”, “anticipate”, “intend”, “potential”, “estimate”, “believe”
or the negative of these terms, or other similar expressions
intended to identify forward-looking statements. Some of the
forward-looking statements contained in this press release include
the completion of the transaction and timing thereof, the receipt
of the necessary regulatory approvals required for completion of
the transaction, the anticipated benefits of the acquisition, the
ability of the Company to continue, consistent with applicable law,
to develop, manufacture, distribute and sell hemp-based
products in the United States and internationally, the Company’s
intention to build an international iconic brand portfolio and
develop disruptive intellectual property. Forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by management, are
inherently subject to significant business, economic and
competitive risks, uncertainties (including the application of
State and federal law to CBD products and the scope of any
regulations by the FDA over CBD products) and contingencies that
may cause actual financial results, performance or achievements to
be materially different from the estimated future results,
performance or achievements expressed or implied by those
forward-looking statements and the forward-looking statements are
not guarantees of future performance. A discussion of some of the
material risks applicable to the Company can be found in the
Company’s current Management’s Discussion and Analysis and Annual
Information Form, both of which have been filed on SEDAR and EDGAR
and can be accessed at www.sedar.com and www.sec.gov/edgar,
respectively. The forward-looking information included in this news
release is made as of the date of this news release and, except as
required by law, Cronos Group disclaims any obligation to update or
revise any forward-looking statements. Readers are cautioned not to
put undue reliance on these forward-looking statements.
Cronos Group:Investor Relations
Contact: Anna ShlimakTel: (416)
504-0004investor.relations@thecronosgroup.com
Media Contact: Barrett Golden, Adam Pollack or
Mahmoud SiddigJoele Frank, Wilkinson Brimmer KatcherTel: (212)
355-4449
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