New Age Beverages Corp. (Nasdaq: NBEV) acquires Tahitian Noni Juice maker Morinda Holdings for $85 million. The combined company would be the 40th largest non-alcoholic beverage company in the world with $300 million in net revenue $20 million in adjusted EBITDA, $200 million in assets and no debt. NBEV stock jumped up about 15% when the market opened today, but later pared the gains.
The Colorado-based beverage company will spend $50 million ($75 million in cash and $10 million in stock) for this transaction, which is expected to close in the late December. The cash consideration for the transaction will be sourced from New Age’s current cash balance.
The combination is expected to expand New Age Beverages’ healthy beverages portfolio. More than $10 million of potential cost and revenue synergies have been identified and are expected to be gained over the next 12 to 18 months.
After the initial cheer, New Age Beverages experience a hangover
The Utah-based Morinda’s business is primarily a monthly subscriber-based model, fulfilled by a worldwide manufacturing and distribution network that includes owned and outsourced production in the US, Germany, Tahiti, Japan and China. More than 70% of its business is generated in the key Asia Pacific markets of Japan, China, Korea, Taiwan, and Indonesia.
In Q3 earnings conference call, the company had stated that working capital will be used in the future on its core business and CBD and health sciences businesses, and for targeted external growth opportunities like alliances or acquisitions.
New Age Beverages will conduct a conference call on Tuesday at 8:30 am ET to discuss further about this transaction.
New Age stock has surged about 125% and it has been trading in the range of $1.30 to $9.99 in the past one year.