Canadian CBD startup Abacus Health Products, maker of the popular arthritis cream and sports ointment CBDMedic, has found a buyer from Colorado. The Toronto-based company, endorsed by former NFL player Rob Gronkowski, will be acquired by Charlotte’s Web Holdings in a deal valued at $69 million, or C$4.39 ($3.04) per share, Charlotte’s Web announced on Monday.
Abacus stock jumped 27 percent Monday morning on the news, while Charlotte’s Web shares rose five percent.
The merger will create the world’s largest vertically integrated hemp-derived CBD company that owns 35 percent of the CBD market, the two companies said.
“The complementary strengths of our relative market positions made this merger a logical strategic move. With this acquisition we strengthen the business to reflect the evolution of the category,” Charlotte’s Web CEO Deanie Elsner said in a statement. “Together we are the most developed CBD company across every channel and segment and positioned to accelerate our growth and extend our market share. Furthermore, it enables us to drive more scale production through our vertically integrated infrastructure.”
Under the agreement, Abacus shareholders will receive 0.85 of common share of Charlotte’s Web for each Abacus Share held. The exchange ratio represents a 38 percent premium of Abacus’s weighted-average trading price on the Canadian Securities Exchange.
“This transaction provides a unique opportunity to our shareholders and employees to participate in the compelling potential of the combined businesses,” Abacus CEO Perry Antelman said in a statement. “By joining with Charlotte’s Web, we have the opportunity to maximize our growth by leveraging the company’s leading brand, vertical integration, infrastructure, expertise, financial position and capital markets presence, and position the combined company to deliver benefits for our stakeholders over the long-term.”