In a deal directly related to the U.S. legalization of hemp in December, a firm that specializes in branding consumer-product companies acquired CBD manufacturer Cure Based Development.
The sale, an all–stock transaction, is valued at $120 million based on expected revenue of $300 million over the next five years.
Level Brands (NYSE: LEVB), whose portfolio includes the Kathy Ireland brand, will issue 15.3 million shares of its common stock with an additional amount of the same number of shares if the $300 million figure is reached.
Cure Based Development will continue to operate as cbdMD, now a wholly owned subsidiary of Level Brands. The CBD company’s founder, Scott Coffman, will serve as CEO.
Both companies are based in Charlotte, North Carolina.
The deal closed Dec. 21, according to a news release – the day after President Donald Trump signed the 2018 Farm Bill into law.
The Farm Bill’s enactment was a crucial step in the completion of the transaction because the law delisted CBD as a Schedule 1 controlled substance, thus opening new business opportunities for hemp entrepreneurs.
Level Brands CEO Martin Sumichrast told investors last month that he doesn’t see cbdMD products competing with the Kathy Ireland line of CBD products.
“We think that the market obviously is big enough out there to really build both product lines up,” he said.