So far this year, Boosh Plant-Based Brands Inc. (CSE: VEGI) (OTCQB: VGGIF) (FSE: 77i) has been nothing short of an execution story and has been working to create shareholder value through a multi-faceted growth strategy that is centered around organic growth, acquisitions, and e-commerce-based initiatives.
From increasing the number of grocery store that sell its plant-based product line to acquiring high-profile plant-based brands, we are of the opinion that Boosh has significantly enhanced its value proposition and de-risked the long-term opportunity. The company is led by a management team that has a proven track record of success and we are bullish on the direction the business is heading.
Enhances Growth Profile via the Acquisition of a Leading Plant-Based Brand
Last week, Boosh announced a transformational acquisition for the business which we expect to be immediately accretive and increase the amount of market share in the plant-based snack food vertical.
The acquisition of the Beanfields brand will further diversify Boosh’s product portfolio with the addition of allergen free flavored bean-based chips which already has a large consumer base.
In 2020, Beanfield generated approx. $14 million of revenue (unaudited) and the brand performed even better in 2021. Going forward, we expect the experience of Boosh’s management team and the distribution infrastructure that is already in place to accelerate the growth of the Beanfield brand.
Another way we expect Boosh to benefit from the acquisition is through the distribution that Beanfield has. Based on the data from the transaction, the bean-based chip brand is being sold by approx. 7,000 health stores. Over time, we believe the acquisition will allow Boosh to sell other products from its portfolio in an increase amount of the locations that already sell the Beanfields brand.
We consider the acquisition to be transformation due to the impact it will have on both the top and bottom line for Boosh. So far this year, the bean-based chip brand tracking to do $10 million in revenue. In comparison, in 2020 Boosh reported less than $1 million in revenue. Combined, this will result in Boosh reporting exponential revenue growth on a quarter-over-quarter basis as it continues to integrate the brand into the business.
An Undervalued Story with Significant Growth Catalysts
Pre-Beanfields acquisition, Boosh’s market capitalization was less than C$15 million. Before the acquisition was reported, we considered the business to be undervalued and believed it has significant growth catalysts due to the increased number of revenue streams and stores that sell its product. The Beanfields transaction is, in short, monumental for Boosh. The Company went from selling Boosh in 600 stores to selling Beanfields in over 7,000 stores. In addition, we consider the terms of the transaction to be extremely favorable for Boosh and believe the deal further de-risks the opportunity. Boosh executed a “Substantially All” asset transaction. Meaning they assume all of the material assets and very little debt. For consideration, they paid 8 million shares, and assumed a $400,000 Promissory Note. Share price at closing was approximately $.50 per share. In short, Boosh paid approximately $3.6 million for a company that Pitchbook valued at $26 million previously. Based on our findings, we believe this deal was one of the shrewdest acquisitions we’ve ever reported on.
Per the press release, the transaction closed on Friday, February 11th. The Company is doing an audit. Should the audit reveal trailing twelve months that are different by 20% of more, the Company may at its discretion, transfer Beanfields back to the owners, and cancel the 8 million shares. Having spoken to Boosh’s management, they believe this is highly unlikely.
Going forward, we expect the management team to put a major emphasis on making the integration of the assets as seamless as possible and our readers should aware of the positive impact this could have on the entire business. Over the next year, we expect Boosh and Beanfields to recognize synergies that result in the business reporting more revenue and reaching profitability.
Not only does the acquisition makes Boosh one of the largest emerging plant-based companies in the world, it falls in line with the management team’s plan to create value for shareholders and find this to be of significance. When we analyze a company, one of the first trends we look at is how the management team follows through our previously announced growth strategies. The transaction raises our conviction level in Boosh’s management team to create value and consider this to be a core pillar of our favorable view on the business.
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