NewAge Beverages Corporation announced it has entered into a definitive agreement to acquire ARIIX, together with four additional companies in the e-commerce and direct selling channels.
The combination will create a global firm with estimated pro forma revenues in excess of $500 million across more than 75 countries worldwide.
NewAge and ARIIX have agreed to create a leading health and wellness firm, with an omni-channel route to market, depth in the e-commerce and direct selling channels, a team of more than 400,000 independent representatives and a portfolio of healthy products. Merging into the combined company are:
- NewAge: One of the fastest-growing beverage companies worldwide with penetration in over 60 countries and a unique omni-channel route to market
- ARIIX: One of the fastest-growing direct selling companies with over 17% CAGR 2015-2019, penetration in over 35 countries and a leading nutritional performance portfolio
- Zennoa: Established in 2016 with its largest presence in Japan and a portfolio of superfood-based dietary supplements, beverages and fermented foods
- LIMU: Global leader in fucoidan-rich, seaweed-based nutritional products and beverages with over 2,000 independent research studies on its proprietary supernutrient
- MaVie: DNA mapping and wellness company with predictive genomic sequencing and a range of nutritional products customized to individuals’ DNA makeup
- Shannen: Award-winning Indonesian skincare and beauty company founded in 2018 with sales of over $25 million in its first two years of operations
NewAge CEO Brent Willis, who will be the CEO of the newly combined company, said, “We are very excited that these companies are coming together to create a powerful global enterprise with tremendous growth potential. We will have the team, the scale, the profitability, the brands and the reach to drive superior growth and return for shareholders and all of our valued independent representatives and consultants worldwide.”
Key Highlights
- Increases scale with expected pro forma revenue in excess of $500 million, with increased free cash flow and positive net income
- Enhances the combined company’s global footprint, adds to the core markets of China, Japan and Europe, and expands market access to over 75 markets worldwide
- Furthers the omni-channel route-to-market strategy with over 80% of products ordered and fulfilled online and over 80% delivered direct to consumers’ homes
- Strengthens portfolio of healthy brands with major new additions to category platforms of Health and Wellness, Healthy Appearance and Nutritional Performance
ARIIX was founded nine years ago by former direct selling senior executives, led by Dr. Fred Cooper and Mark Wilson. The company has garnered over 200 awards in business, leadership, branding and has grown to more than $200 million in revenue and $15 million in EBITDA in 2019. Cooper, who is chief executive officer of ARIIX, will be joining the Board of NewAge as part of the merger.
“We are in an excellent position to accelerate organic growth with our direct business model, our expanding market access, and our healthy product portfolio, and are confident as a result of this merger,” said Cooper.
NewAge has grown from $2 million to over $250 million in less than four years. The company has developed a platform of healthy functional brands sold through its omni-channel route to market across more than 60 countries around the world. The combined entity expects to reach pro forma revenues of over $500 million, with a blended gross margin of approximately 70 percent, and adjusted EBITDA of more than $30 million for 2020.
As part of the combination, NewAge expects to capture approximately $20 million in EBITDA in the first 18 months following closing in cost and revenue synergies in the areas of cost of goods sold, manufacturing efficiencies and scale, operational redundancy, cross-pollination of brands, as well as market and channel expansion.
Consideration for the acquisition will consist of a combination of cash, common stock and convertible notes. At closing, NewAge will pay $25 million in cash and will issue 18 million shares of the Company’s common stock. NewAge will also issue a convertible note for $10 million that matures six months from closing and a convertible note for $141.25 million that matures 24 months from closing. Details of the transaction are included in the Company’s Current Report on Form 8-K dated July 20, 2020. Closing of the transaction is expected to occur in the third quarter of 2020.
