March 3, 2022 -- InvestorsHub NewsWire -- via NetworkNewsWire
Editorial Coverage: Merger and acquisition activity was
completed at an almost frenetic pace in 2021, hitting the highest
number of deals in more than three decades while crushing the
all-time record for dollar amount. After some slowdowns in 2019 and
2020 owing to the coronavirus pandemic, buyers took advantage of
historically low interest rates while sellers benefited from a
booming stock market pushing valuations higher. Global deal flow
topped $5 trillion for the first time ever and, in fact, encroached
on $6 trillion as companies joined forces in preparation for future
growth. Companies from every corner of the world across the full
spectrum of industries made moves to strengthen their fundamentals
and silence concerns over rising inflation and hiccups in supply
chains by penetrating new markets. That’s the route consumer
packaged goods company Flora Growth Corp. (NASDAQ:
FLGC) (Profile) took, further fueling momentum
that has seen major deals completed by AMC
Theatres (NYSE:
AMC), Advanced Micro
Devices (NASDAQ:
AMD), Roblox (NYSE:
RBLX) and Zynga (NASDAQ:
ZNGA).
- Merger and acquisition activity in 2021 at $5.9 trillion
crushed the old record set in 2015 at $4.22 trillion.
- Flora Growth Corp. has been active in the space, closing 2021
and opening 2022 with acquisitions of companies that combined for
~$35 million in revenues and ~$7 million EBITDA.
- The most recent acquisition gives Flora Growth a sizeable
footprint in the U.S., including 300,000 customers, 14,000-plus
distribution points and a GMP manufacturing facility.
- Flora Growth recently raised $34.5 million in an oversubscribed
offering to continue its growth trajectory, also adding new key
hires to its C-suite and advisory board.
Click here to view the custom infographic of
the Flora Growth editorial.
2021: The Year of the Megadeal
After setting the bar at roughly $4.22 trillion in M&A
activity in 2015, funds and corporations tapped the brakes on
big-dollar buys in subsequent years, apparently allowing the demand
spring to coil tighter into 2021, when the number of deals topped
63,000 and the transactional volume soared to $5.9
trillion, according to market researchers at Refinitiv.
Geographically, the U.S. experienced the biggest jump in activity,
as deal flow expanded 82% year-over-year to about $2.5
trillion.
In PriceWaterhouseCoopers’ Deals 2022
Outlook, the professional services firm took note of the
willingness to spend as measured by a record number of deals in
2021 priced at $5+ billion. The rise wasn’t because smaller deals
were ignored. An average year includes 400–500 transactions in the
range of $500 million to $5 billion. There were more than 800 such
deals in 2021.
With most experts expecting the Federal Reserve to remain as
accommodating as possible, speculation is that companies will
remain aggressive in buying growth this year.
Coming Out Swinging
Flora Growth
Corp. (NASDAQ:
FLGC) specializes in carefully curating and
manufacturing products that span a diverse group of markets,
demographics and revenue streams. The model is multidimensional,
involving several verticals (i.e., commercial, brands, research and
development) and leveraging owned infrastructure to develop unique
brands that are differentiated in prominent retailers such as
Walmart and Macy’s.
Across its portfolio of brands, including but not limited to
Tonino, Lamborghini, Vessel Brand Inc., Stardog Loungewear, Mambe
and Mind Naturals skincare, Flora Growth serves more than half a
million customers with products that prioritize natural ingredients
and value-chain sustainability. The uniqueness and quality of the
Flora portfolio has made a mark in the sector and is only gaining
momentum.
The company ended 2021 on a roll and isn’t showing any signs of
letting off the accelerator in 2022. Management is active in
completing accretive acquisitions, adding key staffers and
strengthening its fundamentals at it expands into the biggest
market in the world. The latest moves include completing
an initial
public offering to list on the NASDAQ exchange, closing
the purchase of
Vessel Brand, forging a Latin
American joint venture, and closing an over-subscribed capital
raise that beefed up the cash position of a clean balance sheet
with negligible debt.
Flora Growth’s recent strategic maneuvers continue the momentum
from 2021, when the company 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
the 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 looks to have a
pristine balance sheet with minimal debt complemented by a large
cash balance.
Planting Flag in U.S. Market
Earlier this week, Flora Growth arrived on the U.S. scene in a
big way by closing its most
recent acquisition to immediately provide a jolt to
combined corporate revenue. Incorporated less than five years ago,
FLGC’s newly acquired company quickly climbed the ranks as a
category-leading wellness CPG brand with a portfolio of more than
300 branded products, a full-scale manufacturing facility in Ft.
Lauderdale, Florida, and a reputation for powerful natural products
sourced domestically.
Shipping products from its own distribution center, the company
established an omni-channel distribution network that places its
goods in 14,000-plus retail stores that has resulted in more than
300,000 loyal customers. Supported by extensive sales channels and
popular products, the company recorded $28 million in audited
revenue in 2020 and $7 million in EBITDA (earnings before interest,
taxes, depreciation, and amortization).
As part of the merger, Flora Growth added to its team of
venerable experts, bringing onboard Hussein Rakine, who was named
to Forbes’ 2022 list of 30 Under
30 list for retail and ecommerce. In addition to Rakine,
Flora Growth has named a chief strategy officer, chief marketing
officer, SVP of global operations and formed an advisory board as
it positions for continued expansion.
Another $6.6 Million in Revenue
The Florida acquisition followed Flora Growth’s acquisition of
Vessel Brand Inc. in November. Both deals were completed via cash
and stock, a savvy strategy that keeps skin in the game for the
acquired entities. Vessel has been executing on a go-to-market
strategy for direct-to-consumer sales in both the United States and
internationally. To that point, trailing 12-month revenue leading
into the acquisition was reported at $6.6 million, up 90% versus
the comparable 12 months prior.
Flora Growth management hasn’t yet provided updated guidance on
2022 revenue based on the new announcement. However, late last
year, Flora Growth released revenue estimates for this year of
between $35 million and $45 million, which should pique investors’
interest about expectations going forward once synergies and the
full impact of the new assets and team members are realized. This
should have investors eagerly awaiting the release of Q4 and 2021
full-year results along with management discussion on the merger’s
effect on the top and bottom lines this year, which certainly could
be the next market catalyst.
Want Fast Growth? M&A Is the Answer
The world has certainly dealt with plenty of obstacles over the
last few years, headlined by the COVID-19 pandemic, social unrest,
cyberattacks and now the invasion of Ukraine by Russia that is
further upending global commerce. These factors have shone a bright
light on the importance of diversification and self-sufficiency in
services and sourcing products. Companies are addressing these
needs in a variety of ways, including M&A activity, reshoring
and nearshoring to ensure delivery and stability to meet consumer’s
needs.
AMC
Theatres (NYSE:
AMC), the largest theatrical exhibitor in the world,
has been active since raising $230 million last year to consolidate
the industry and re-open closed movie theaters. With its
acquisitions completed in December, AMC acquired four former
Pacific & Arclight locations in 2021. The trend
continues in 2022, with AMC making more
acquisitions and striking lease agreements to keep a
foothold on its market dominance. The company now operates
approximately 950 theaters and 10,500 screens across the globe.
Advanced Micro
Devices (NASDAQ:
AMD) in mid-February closed its
acquisition of Xilinx for $49 billion, completing the
largest semiconductor deal in history. AMD estimates that the
acquisition increases its total addressable market to $135 billion,
while strengthening its financial model through diversified revenue
streams across multiple, high-margin businesses. Management sees
the merger as accretive to non-GAAP margins, non-GAAP earnings per
share, and free cash flow in the first year.
Roblox (NYSE:
RBLX) made a significant move in the second half
of 2021 with the
acquisition of Discord competitor Guilded Inc., a
privately held company focused on building a platform to connect
gaming communities, for an undisclosed amount. Since launching in
2017, the Guilded team built a powerful platform to connect gaming
communities, including tools and features such as tiered voice
chat, video chat, integrated calendars, scheduling tools and more.
In March 2021, the company launched its bot API to simplify bot
development allowing users with little or no programming experience
to easily create bots.
Zynga (NASDAQ:
ZNGA), the Farmville creator, closed on
the acquisition
of NanoTribe, an independent mobile game studio based in
Germany. The Berlin-based studio is the first studio outside of
Turkey managed by Rollic, a subsidiary of Zynga, adding to Rollic’s
growing family of hypercasual game developers and marking the
expansion of its base into new markets. NanoTribe has previously
published games with Rollic, including Cashier 3D, which has
surpassed more than 33 million downloads worldwide, and Arrow
Fest, a 2021 breakout hit.
Last year was a banner year for people that enjoy mergers and
acquisitions. No one should feel that they missed out of too much,
though, because it looks like the frenzy could continue throughout
2022.
For more information about Flora Growth Corp.
(NASDAQ:
FLGC), please visit Flora Growth
Corp. (NASDAQ:
FLGC).
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