Connecticut-based marijuana firm BR Brands on Monday announced it will merge with Dixie Brands, a Denver manufacturer of cannabis-infused products and a consumer packaged goods company, in a $43 million reverse takeover.
Under the terms of the transaction, BR Brands will own 80% of the merged company and Dixie shareholders will possess the remaining 20%.
The transaction is expected to be completed in the third quarter of 2020.
It’s BR Brands’ second foray into the Colorado market in the past sixth months.
The company acquired Denver-based Mary’s Brands, which produces marijuana- and hemp-related products, for an undisclosed price.
BR Brands has operations in 11 states, including California-based brands of Defonce, Beezle and Rebel Coast, as well as Puerto Rico.
The company has had a “longstanding relationship with Dixie,” BR Brands Chair Andrew Schweibold said in a statement.
Chuck Smith, CEO and president of Dixie, said the “challenges of the current cannabis-related markets” prompted the 10-year-old company to seek a “strategic partner” for its long-term growth.
The merger, Smith said, will:
- Strengthen Dixie’s balance sheet by reducing its debt.
- Improve its cash position.
- Provide opportunities for revenue growth and capture greater margins.
Smith will serve as CEO and president of the merged company.
Greg Robins, Dixie’s chief financial officer, resigned, effective immediately.
According to the company, Robins left Dixie for reasons unrelated to the proposed merger.
If the merger is not consummated, Dixie would owe BR Brands a $6.5 million breakup fee.
Dixie trades as DIXI.U on the Canadian Securities Exchange.
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