The Cultured Nut currently has distribution in several online and grocery retailers and select Whole Foods stores. It is a growing artisan vegan cheese-alternative manufacturer with a well-established line-up of products consisting of block style cheese alternatives, cream cheese alternatives and plant-based butter alternatives; which are tree-nut-based and both soy and gluten free. VERY has been selling The Cultured Nut’s products in its eCommerce and retail stores since September 2017.
The dairy alternatives market, including the plant-based and vegan sector, is expected to grow at a CAGR of 11.2% from 2020 to 2027 to reach US$44.9bn by 2027. With the plant-based food industry growing at a rapid pace, VERY said the intended acquisition is complementary to its existing product line under The Very Good Butchers brand.
Mitchell Scott, CEO of The Very Good Food Company, said, “The proposed acquisition of The Cultured Nut marks VERY’s first move into the dairy alternatives space and is the next natural step towards achieving our near-term objective of being a leader in the plant-based food technology industry.
“With a shared ethos of using only high quality whole food ingredients, The Cultured Nut is a perfect addition to our existing and growing product portfolio. We have been selling their plant-based cheeses in our eCommerce and retail stores since September 2017, and have seen increased demand from consumers and highly positive reviews. We feel that by quickly integrating The Cultured Nut into our existing processes and distribution network, these synergies will allow us to scale their operations significantly and create a key, and entirely new revenue stream for our company.”
Under the terms of the LOI, completion of the acquisition is subject to conditions including, but not limited to, the completion of mutual due diligence, the negotiation and execution of a definitive agreement and the satisfaction of all closing conditions (including obtaining all regulatory approvals).
The aggregate purchase price for Cultured Nut will be C$3m (US$2.34m) consisting of: a C$1m (US$780,000) cash payment; such number of common shares of the company equal to C$1m divided by the greater of the 30-day volume weighted average trading price of the company shares ending two trading days prior to closing of the acquisition or the minimum price as may be permitted by the Exchange; a C$925,000 (US$722,000) cash payment subject to meeting certain milestones related to integration of the Cultured Nut’s business; and a C$75,000 (US$58,600) cash payment subject to certain indemnification requirements.
In addition, key Cultured Nut employees will enter into employment agreements with VERY. The parties have agreed to an exclusivity period until February 15, 2021 to complete due diligence and to negotiate and execute the definitive agreement. However, the company said it can give no assurance that the acquisition will be completed as proposed, or at all.
The LOI is non-binding and VERY said neither it, nor Cultured Nut, is under any obligation with respect to the acquisition or otherwise. Other than as specifically set out in the LOI, no definitive agreement will exist between VERY and Cultured Nut relating to the acquisition unless and until a definitive agreement has been executed.