Neptune Wellness Solutions acquires SugarLeaf Labs to establish U.S. hemp supply chain

May 9, 2019

Neptune Wellness Solutions Inc. is expanding its North American hemp supply footprint by acquiring all of the assets of SugarLeaf Labs LLC and Forest Remedies LLC.

Neptune Wellness Solutions Inc. (Quebec, Canada) is expanding its North American hemp supply footprint by acquiring all of the assets of SugarLeaf Labs, LLC and Forest Remedies LLC (collectively, SugarLeaf), a commercial hemp company based in North Carolina. Through the acquisition, Neptune is establishing a substantial U.S. hemp extract supply chain, gaining a 24,000-sq-ft facility and SugarLeaf’s innovative cold ethanol processing technology, with a processing capacity of 1,500,000 kg. The facility uses hemp cultivated by licensed U.S. farmers.

SugarLeaf is being acquired by Neptune on a debt-free basis for $18 million, paid as $12 million in cash and $6 million in common shares. In addition, by earning over $8 million in annual adjusted earnings before interest, tax, depreciation and amortization (EBITDA) and other performance targets, additional consideration of up to $132 million will be paid over each of the next three years as a combination of cash and shares, making the maximum aggregate purchase price $150 million.

"With Neptune’s Canada-based operations ramping up production and the cannabis industry growing exponentially around the world due to an evolving legal global framework, now is the time to establish a state-of- the-art supply chain in the U.S. marketplace,” said Jim Hamilton, president and CEO of Neptune, in a press release. “SugarLeaf’s capacity, efficient production of high-quality extracts, and strong supplier relationships, combined with our existing competencies in customer relationships and science-based formulations, creates a strong value proposition to U.S. brands who want to offer differentiated products to consumers. Neptune’s objective is to be a world leader in extraction, purification, and formulation of value-added cannabis and natural health products.”

The transaction is expected to close on or before July 31, 2019.