March 1, 2022 -- InvestorsHub NewsWire -- via NetworkNewsWire
Editorial Coverage: Last year was a monumental year for merger
and acquisition activity. Records worldwide weren’t just broken,
they were smashed by M&A
activity reaching a stunning $5.9 trillion, up 64% from
2020 while representing the highest volume since 1980. More than
63,000 M&A transactions were completed as companies found new
avenues to growth against the backdrop of a lingering COVID-19
pandemic, rising inflation and disrupted supply chains. The
sharpest increase in deal flow came from the United States. which
experienced an 82% surge. Companies from all different sectors and
industries joined forces to position for continued future success,
including diversified CPG wellness company Flora
Growth Corp. (NASDAQ:
FLGC) (Profile), which recently made a significant
acquisition to fuel expansion into the U.S. market. Constant
consolidation is rampant involving a wide variety of well-known
names, including Microsoft (NASDAQ:
MSFT), Activision Blizzard (NASDAQ:
ATVI), NVIDIA (NASDAQ:
NVDA) and Pfizer Inc. (NYSE:
PFE).
- PriceWaterhouseCoopers expects the momentum for M&A
activity to continue into 2022.
- Flora Growth Corp. added companies with ~$35 million in
revenues and ~$7 million EBITDA (per audited financials) through
two significant acquisitions in recent months.
- FLGC’s most recent acquisition generated $28 million in
revenue, $7 million in EBITDA in 2020.
- Flora Growth has raised ~$35 million in capital and added
several key executives to fuel its rapid growth.
Click here to view the custom infographic of
the Flora Growth editorial.
Megadeals Headline Record Year
A record $5.9 trillion in M&A activity in 2021 may have
reflected some pent-up demand from slower activity in the previous
three years, catapulting 2021 to easily surpass the previous record
set in 2015 of approximately $4.5 trillion. According to
professional services firm PriceWaterhouseCoopers’ Deals 2022
Outlook, there were more “megadeals” (transactions of $5-plus
billion) in 2021 than ever before and more than 800 deals between
$500 million and $5 billion, far exceeding a typical year of 400 to
500. PwC expects the deal-making pattern to continue in 2022 as
companies investigate mergers, divestures and other transactions.
At a time with high valuations and even higher investor
expectations for growth, acquiring revenue is a reliable source of
top-line and bottom-line expansion.
Writing the Playbook
Flora Growth Corp. (NASDAQ:
FLGC) is not only writing its own playbook on
M&A, it’s also coming out the gate fast in 2022, strengthening
fundamentals, hiring new key team members and closing another
acquisition, one that will immediately add substantial revenue and
earnings to the books. Flora Growth’s product portfolio spans a
variety of verticals and diverse revenue streams now serving more
than 500,000 customers, including but not limited to Tonino
Lamborghini, Vessel Brand Inc., Stardog Loungewear, Mambe and Mind
Naturals skincare, all goods carefully crafted and targeted for the
end consumer. Each brand prioritizes natural ingredients and
value-chain sustainability to create products that help consumers
restore and thrive. The brands and market verticals (wholesale,
CPG, pharmaceutical research, etc.) underscore a strategy of
leveraging owned infrastructure and building bespoke brands that
gain shelf space with major distributors including Macy’s and
Walmart.
Flora Growth’s recent strategic maneuvers continue the momentum
from 2021, when the company completed
its IPO and closed the
acquisition of Vessel Brand Inc., a direct-to-consumer
(“DTC”) business that experienced 90% year-over-year revenue
growth, in a cash-and-stock deal. Flora Growth also forged a new
joint venture late in 2021 to distribute
award-winning KaLaya brand through Latin American markets
and closed an oversubscribed public offering that added $34.5
million to the coffers to keep on executing. The company has a
pristine balance sheet with minimal debt complemented by a large
cash balance.
Capturing US Market Share
This week, Flora Growth entered the U.S. market in a major way
with its most
recent acquisition, a category-leading wellness brand for $16
million in cash and 9.5 million shares of FLGC common stock. The
newly acquired company generated audited revenues of $28 million in
2020 along with $7 million in earnings before interest, taxes,
depreciation and amortization (EBITDA).
Benefits abound in this acquisition. Founded in 2017, the
company rapidly ascended in the consumer-packaged goods (“CPG”)
wellness space with its portfolio of more than 300 branded products
and omni-channel approach that includes an extensive network of
over 14,000 retail locations.
Flora Growth will also retain key leadership from the
acquisition, including Hussein Rakine, who was named to Forbes’
2022 list of 30 Under
30 list for retail and ecommerce. There’s lots of new
talent around Flora Growth lately as it grows in leaps and bounds,
including a recently appointed chief strategy officer, chief
marketing officer, SVP of global operations and a newly formed
advisory board.
If One Is Good, Two Is Better
In November, Flora Growth completed the acquisition of Vessel
Brand Inc. for aggregate consideration consisting of a combination
of cash and the issuance of Flora common shares. Formed in 2018,
Vessel’s go-to-market strategy for DTC sales in the U.S. and
internationally has been paying off, reaching $6.6 million trailing
12-month revenue ahead of the acquisition, up by 90% from the
comparable period a year earlier.
With consideration for the Vessel acquisition, Flora Growth said
in December that it anticipates revenue in the range of $35–$45
million for 2022. However, those numbers did not reflect FLGC’s
most recent acquisition. The full extent of the synergies won’t be
known until the integration is complete, but management expects
revenue to be amplified as operations and teams are merged. To that
end, investors will be eagerly on the lookout for any revisions to
guidance when the company next releases its quarterly and full year
2021 results, which could easily serve as another market
catalyst.
Want Fast Growth? M&A Is the Answer
If the global pandemic, social unrest, cyberattacks and extreme
weather events have taught companies anything, it should be to
protect yjrot supply chain as best as possible and look to achieve
self-sufficiency in products and services. This is increasingly
possible through a number of practices, including reshoring,
nearshoring or M&A by vertically integrating upstream links to
improve certainty of delivery.
Microsoft (NASDAQ:
MSFT) said on Jan. 18, 2022, that it has agreed
to terms to acquire
Activision Blizzard for $95 per share in an all-cash deal
valued at $68.7 billion, inclusive of Activision Blizzard’s net
cash. Microsoft recognizes that three billion people actively play
games today and, fueled by a new generation steeped in the joys of
interactive entertainment, gaming is now the largest and
fastest-growing form of entertainment. The acquisition will
accelerate the growth in Microsoft’s gaming business across mobile,
PC, console and cloud and will provide building blocks for the
metaverse. When the transaction closes, Microsoft will become the
world’s third-largest gaming company by revenue, behind Tencent and
Sony.
Activision Blizzard (NASDAQ:
ATVI) is the owner of iconic franchises such as
“Warcraft,” “Diablo,” “Overwatch,” “Call of Duty” and “Candy
Crush,” in addition to global eSports activities through Major
League Gaming. Through the Microsoft acquisition, CEO Bobby
Kotick sees the
opportunity to leverage Microsoft’s scale and resources to
better grow the company’s existing franchises and unlock the
library of games that its family of companies has assembled over
the last 40 years. For the year ended Dec. 31, 2021, Activision
Blizzard reported GAAP revenue of $8.8 billion, up from $8.09
billion in 2020.
NVIDIA (NASDAQ:
NVDA) announced in January that Bright Computing,
a leader in software for managing high performance computing
systems used by more than 700 organizations
worldwide, had become
part of NVIDIA. The announcement noted that companies in
healthcare, financial services, manufacturing and other markets use
Bright Computing’s tool to set up and run HPC clusters, groups
of servers linked by high-speed networks into a single unit.
According to the announcement, the company’s product, Bright
Cluster Manager, became the latest addition to NVIDIA’s software
stack for accelerated computing.
Pfizer Inc. (NYSE:
PFE) announced late last year that it
had entered into
a definitive agreement with Arena Pharmaceuticals Inc.
under which Pfizer will acquire Arena, a clinical-stage company
developing innovative potential therapies for the treatment of
several immuno-inflammatory diseases. Under the terms of the
agreement, Pfizer will acquire all the outstanding shares of Arena
for $100 per share in an all-cash transaction for a total equity
value of approximately $6.7 billion. The boards of directors of
both companies have unanimously approved the transaction.
Anyone that is a fan of M&A activity enjoyed a whirlwind
year in 2021. Lucky for them, there could be a repeat in 2022.
For more information about Flora Growth Corp.
(NASDAQ:
FLGC), please visit Flora Growth Corp. (NASDAQ:
FLGC).
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