Stem Holdings Inc. (OTCMKTS:STMH) has entered a definitive agreement and plan for reorganization with eCommerce and delivery-as-a-service (Daas) provider Deliveries Inc. (OTCMKTS:DRVD).
Stem Holdings acquire Driven Deliveries
According to the agreement, Stem Holdings will acquire all outstanding stock of Driven Deliveries. Upon completion of the acquisition, the companies will combine to form a vertically integrated marijuana company with a Daas platform, Driven By Stem, to meet cannabis consumers’ needs. Driven By Stem will help in meeting the growing demand for adult use and medical cannabis by offering home delivery with disruptive and best-selling products.
The companies will finalize the all-stock transaction towards the end of this year. As per the terms of the deal, Driven Deliveries stockholders will receive one common Stem Holding share for every common Driven Delivery share held for aggregate proceeds of CA$41.3 million. The combined company will have a market cap of around $54 million based on the closing price of Stem and Driven Shares on OTCQX and OTCQB, respectively.
Notably, the combined entity, Driven By Stem, after the completion of the transaction will have its headquarters in Boca Raton, Florida. Already shareholders of Driven Deliveries have committed around $10 million for funding Driven By Stem’s business enhancement within Stem Holding’s present market footprint that includes Oklahoma, California and Oregon.
Acquisition to be earnings accretive immediately
The acquisition will be earnings accretive in the calendar year with Driven By Stem expected to generate revenues of $75 million and gross profit of $27 million. Recently in Q2 2020, Stem Holdings and Driven Deliveries generated combined revenue of $12.4 million with combined gross profit of around $4.94 million. For the full calendar year 2020, the companies expect a combined revenue of $49 million and gross profit of $18 million.
Driven By Stem plans to integrate the delivery capabilities of Driven Delivers and its strong tech in different states that Stem Holdings operates. The combined entity will add Stem Holding’s Iconic brands to the Driven Deliveries marketplace of more than 400 marijuana products. Operations of Driven By Stem will span across nine states.