TGOD, eyeing US marijuana market, acquiring Galaxie for CA$21 million

(This story has been updated with information about Galaxie’s joint venture in Canada.)

Mississauga, Ontario-based The Green Organic Dutchman reached a definitive agreement to acquire Galaxie Brands Corp., a licensed producer specializing in marijuana  pre-roll manufacturing, edibles, vapes and oils.

The deal is for CA$21 million in Green Organic Dutchman stock plus an additional CA$15 million in shares if financial milestones are achieved by Dec. 31, 2022, according to a news release.

Green Organic Dutchman said the deal will provide exposure to the edibles category via Galaxie’s exclusive joint venture in Canada with Wyld, a cannabis edibles maker based in Oregon.

The Mississauga company said the acquisition will combine its organic cultivation capabilities with Galaxie’s “product development expertise and formulation lab capabilities” to expand its product portfolio.

The company’s portfolio will expand from 157 to 215 listings across Canada, the release noted.

Galaxie has a 26,000-square-foot facility in Ontario.

In the release, Green Organic Dutchman said Galaxie’s “strategic U.S. partnerships and existing industry relationships” are expected to accelerate the company’s entry into the American market.

However, few details were provided, except for some personnel changes:

• The current CEO of Galaxie, Angus Footman, will join TGOD’s board as chair.
• Galaxie President Olivier Dufourmantelle will join TGOD’s board, in addition to taking up the position of president of U.S. operations.
• TGOD’s current chair, Jeff Scott, will remain on the board as an independent director.

Footman previously founded Park Lane Farms, an early producer of medical cannabis in Canada, before selling the company to Canopy Growth Corp. in 2014.

At Canopy, Footman served as managing director and president of Tweed Farms, formerly Park Lane, until 2018.

Dufourmantelle was previously chief operating officer of Canopy Rivers and Canopy Growth.

The companies say the deal is expected to result in “significant” cost synergies.

“The acquisition of Galaxie will allow TGOD to expand by increasing scale, innovation, and operating capabilities, with the addition of exciting brands in Canada,” TGOD Chief Executive Officer Sean Bovingdon said in a 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.”

The acquisition is scheduled to close around Nov. 15, 2021.

The Green Organic Dutchman trades as TGOD on the Canadian Securities Exchange.