When attempting to read the tea leaves for a company, there are few better approaches than finding out what its directors have done before.
Yooma Wellness Inc (CSE:YOOM, OTC:LVVEF, AQSE:YOOM), a London debutant this summer, is currently led by executive chairman Lorne Abony and chief executive Jordan Greenberg.
Earlier this year, Abony was chairman of European vertically integrated cannabis company EMMAC Life Sciences as it was snapped up by North American giant Curaleaf for a valuation of US$407mln.
Prior to founding Yooma, Abony and Greenberg built Nuuvera up from the ground to an eventual takeover by Canada’s Aphria for C$826mln.
Abony’s name is also likely to be fondly remembered by some London investors from his AIM-listed online game company FUN Technologies, which was sold to Liberty Media for US$484mln.
Yooma is the pair’s current project in the CBD and wellness space – and while it is still in the relatively early stages, a flurry of dealmaking has already built a vertically integrated group that spans four countries.
Focusing on wellness products that include hemp seed oil and hemp-derived cannabinoid (CBD) ingredients, the Toronto-headquartered team has acquired operations in the US, UK, France and Japan.
At the top of the vertical-integration tree is US-based Socati, which produces cannabinoid ingredients including CBD and other minor cannabinoids.
It currently operates via a 22,000 sq ft facility in the state of Montana that is compliant with Global Food Safety Initiative (GFSI) manufacturing standards as well as being GMP and SQF certified, and being one of the only producers of USDA certified organic CBD.
The group also manages distribution channels in North America, the UK, around mainland Europe and in Japan, allowing the company to sell via online retailers, large offline chains and independent retail outlets.
Facing the consumer is already a sizeable portfolio of brands, including UK based Vitality CBD, which is on the shelves of Asda, Tesco, Boots and Lloyds Pharmacies; CBD skincare brand Blossom, which was relaunched in the last quarter with nine new products and key listings bagged in Selfridges and the Queen’s pharmacist John Bell & Croyden; French subsidiary Greenleaf’s What the Hemp protein brand, which in the past quarter was listed in over 400 of French grocery giant Casino’s shops; and MYO Plant Nutrition, a CBD-based nutraceutical brand, which was launched on Amazon UK as part of the online giant’s selective CBD pilot programme.
Blossom, MYO and What the Hemp were acquired, along with French nutrition and supplement specialist Hello Joya, in a licence deal with EMMAC (now Curaleaf International) in March 2021.
Yooma followed that deal by adding a London listing on the Aquis exchange in August and snapping up Vitality for £10.2mln in the same month, before completing a hat-trick of deals in October.
Sparkling water maker Big Swig was slurped up for US$2.5mln and fellow US company N8 Essentials, owner of a 14,000 sq ft manufacturer facility, was valued in an all-equity deal at US$0.85mln, before Yooma paid US$12mln in cash and shares for Tokyo-based Vertex, which sells a range of proprietary wellness products via various home shopping networks and online marketplaces.
As CEO Greenberg says, the board believe these and other potential deals in the CBD and wellness space offer very good value.
“Prices have come off considerably over the last 18 months or so. We see excellent value in the space,” he says.
After investor sentiment in the space was shaken during 2020, the takeover of EMMAC by Curaleaf, the merging of Aphria and Tilray, and the acquisition of GW Pharma by Jazz Pharmaceuticals signalled that dealmaking is back on in a serious way.
“Buying for cash and stock, we typically are paying a multiple of current revenue with incentives based on forward earnings,” Greenberg says.
“We're paying for actual performance and we think that also provides the right alignment for the vendors who typically are staying on and operating those businesses, as well as aligned them at the topco level as they also become shareholders of Yooma.”
After the rush of acquisition activity in recent months, he says the group has now taken a step back for a period of integration of those new additions and refinement of operations before looking at additional acquisition targets in the first half of 2022.
“It’s still early days for the industry and we see huge opportunities in wellness and in CBD particularly – with a lot of very interesting opportunities for us to fill in pieces of the puzzle in terms of the full vertical integration strategy.”
With medical cannabis and CBD now legal in some form across most of North America, the European Union and the UK, as well as Latin America, total global sales including adult-use cannabis are estimated to rise from over US$37bn in 2021 to around US$105bn by 2026, according to the annual Global Cannabis Report from UK-based research firm Prohibition Partners.
Yooma’s latest results indicated that the annualised revenue run rate will top US$20mln in the fourth quarter.
As well as expectations of more dealmaking in 2022, there are plans for a future step up to a London Stock Exchange listing that should bring deserved wider attention for this experienced management team and their ambitious plans.