GenTech, a publicly traded company focused on creating a national chain of retail spaces where customers can enjoy CBD-infused teas and coffees, has announced a letter of intent to acquire an unnamed California-based CBD e-commerce retailer in an all-stock transaction.
The target is a profitable CBD distributor focused on the CBD-infused coffee and tea market, according to a company press release. The acquisition will complement GenTech’s brick-and-mortar café model, as GenTech’s first “CBD-infusion Café” is expected to open in Q1 2020, according to the release.
“This is a perfect way to augment our physical CBD Café model,” CEO David Lovatt said in a public statement. “We anticipate multiple lines of synergy following a prospective acquisition. This should be a win-win for both parties and expand our reach immediately.”
Growth estimates for the overall CBD market are a driving factor in this transaction, according to the press release, which cites Brightfield Group’s recent research report that predicts a 706-percent year-over-year sales increase in CBD products in the U.S. this year, totaling around $5 billion in sales. Sales are expected to reach $23.7 billion by 2023, according to Brightfield Group’s projections.
“Completely apart from operational synergies, the investment in horizontal expansion in the CBD market is clearly warranted given current industry trends and forecasted growth over the coming two-to-five-year time horizon,” Lovatt said in a public statement. “This deal makes sense from every angle and should drive a great deal of shareholder value. »