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Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) Soaks Up More Market Share

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Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF), along with Abacus Health Products, Inc. (OTCQB:ABAHF), a leader in over-the-counter topical products combining active pharmaceutical ingredients with hemp extract, are pleased to announce that they have entered into a definitive arrangement agreement pursuant to which Charlotte’s Web proposes to acquire all of the issued and outstanding subordinate voting shares of Abacus, after conversion of all outstanding proportionate voting shares of Abacus into Abacus Shares.

According to the release, “Under the terms of the Arrangement Agreement, shareholders of Abacus (“Abacus Shareholders”) will receive 0.85 of a common share of Charlotte’s Web (“Charlotte’s Web Share”) for each Abacus Share held (the “Exchange Ratio”). The Exchange Ratio implies a price per Abacus Share of C$4.39, representing a premium of 38% based on the 10-day volume weighted average price (“VWAP”) of the Abacus Shares on the Canadian Securities Exchange (“CSE”) and the 10-day VWAP of the Charlotte’s Web Shares on the Toronto Stock Exchange (“TSX”) as of March 20, 2020, for implied total equity consideration of approximately C$99 million.”

Charlotte’s Web Holdings Inc (OTCMKTS:CWBHF) bills itself as a company that develops and distributes hemp-based cannabidiol (CBD) wellness products. Its products include CBD hemp oils, capsules, topicals, and pet products that feature CBD hemp oil extracts.

Charlotte’s Web Holdings, Inc. sells its products online as well as through distributors, and brick and mortar retailers.

The company was formerly known as Stanley Brothers Holdings Inc. and changed its name to Charlotte’s Web Holdings, Inc. in July 2018. The company was incorporated in 2018 and is headquartered in Boulder, Colorado.

According to company materials, “Charlotte’s Web Holdings, Inc. is the market leader in the production and distribution of innovative hemp-based cannabidiol (“CBD”) wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into whole plant hemp extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Industrial hemp products are non-intoxicating. Charlotte’s Web current product categories include tinctures (liquid products), capsules, topical, as well as pet products. Charlotte’s Web hemp-based whole plant extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website.”

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As noted above, CWBHF just announced, along with Abacus Health Products, Inc. (OTCQB:ABAHF), a leader in over-the-counter (“OTC”) topical products combining active pharmaceutical ingredients with hemp extract, are pleased to announce that they have entered into a definitive arrangement agreement pursuant to which Charlotte’s Web proposes to acquire all of the issued and outstanding subordinate voting shares of Abacus, after conversion of all outstanding proportionate voting shares of Abacus into Abacus Shares.

Traders will note 7% piled on for shareholders of the company during the trailing month. What’s more, the stock has seen a growing influx of trading interest, with the stock’s recent average trading volume running 14% over the long run average.

“The complementary strengths of our relative market positions made this merger a logical strategic move,” said Deanie Elsner, Chief Executive Officer of Charlotte’s Web. “With this acquisition we strengthen the business to reflect the evolution of the category. Because most of Abacus’s products are positioned in adjacent categories, our combined distribution reach has limited shelf overlap. 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.”

Earning a current market cap value of $283M, CWBHF has a significant war chest ($88.9M) of cash on the books, which is balanced by about $38.2M in total current liabilities. One should also note that debt has been growing over recent quarters. CWBHF is pulling in trailing 12-month revenues of $125.5M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 6.4%. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $CWBHF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $CWBHF, either long or short, and we have not been compensated for this article.

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