Neptune offers shares to media company in CBD partnership

08-Oct-2019 - Last updated on 08-Oct-2019 at 16:19 GMT

Neptune acquired the North Carolina facility where its CBD products are made earlier this year. Neptune Wellness Solutions photo.

Related tags Cbd Krill oil M&A

Neptune Wellness Solutions has entered into an equity partnership with a media company to drive the visibility of its hemp-derived CBD products in the US market.

Neptune offers shares to media company in CBD partnershipNeptune pivoted several years ago from krill oil raw material supply to a formulation strategy and a concentration on hemp extraction, and sold its krill oil business to former competitor Aker BioMarine.

Big media reach

Neptune has now entered into a partnership with American Media, LLC, which publishes magazines such as Men’s Journal and Us Weekly. According to Neptune, the company’s portfolio of brands has a combined circulation of more than 5.7+million and reaches more than 53 million readers each month. American Media's online reach consists of more than 65 million unique visitors and more than 762 million page views a month.

The deal is meant to support the growth of Neptune’s consumer brands in the US market. Those include Forest Remedies, which is a line of hemp-derived CBD supplements, and OceanO3, a legacy krill oil line.

An unusual aspect of the deal is how it will be financed. American Media has agreed to provide advertising and creative services to Neptune to support the marketing and commercialization of Neptune's consumer-facing brands in the US In return, the company will have the opportunity to become a shareholder in Neptune.

Neptune, which is based in Laval, Quebec, will issue to AMI 3 million warrants, each warrant allowing the holder to purchase one common share of Neptune at an exercise price of $8 USD per share and with a 5-year expiration date. The warrants will vest proportionally to the services rendered by AMI. Upon exercise of the warrants AMI will be required to hold the shares acquired for a minimum of 6 months.

Huge growth for hemp

The structuring of the compensation end of the deal reflects the perceived huge growth potential for hemp based products in the US. Earlier this year Neptune acquired Sugar Leaf Labs, a hemp processing facility in North Carolina and owner of the Forest Remedies brand. That deal could end up being worth as much as $150 million.

"American Media's pedigree and reach will accelerate the growth of Neptune's consumer-facing products into the US retail landscape. We are excited to have American Media join the Neptune family," said Michael Cammarata, CEO of Neptune.

Cammarata said Neptune envisions a future where hemp ingredients will find a home in beauty products, personal care products as well as in what the company called ‘home care’ products.

“This further enhances our ability to build a diverse customer base which includes hemp, nutraceutical and consumer package goods companies,” Cammarata added.