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CSM Announces Acquisition of Wellness Brand, Me Today

Published: Wed 11 Dec 2019 09:21 AM
The directors of CSM Group Limited (NZX: CSM) announce that CSM has reached agreement to acquire 100% of The Good Brand Company Limited, a sales and marketing business, and Me Today Limited (which represents the wellness brand Me Todaytm), both of which operate in the health and wellness sector.
Me Today is a New Zealand health and wellness brand that produces premium quality products clearly linking supplements and natural skincare, ultimately making it easier for consumers to shop. Me Today products are formulated using highly absorbable forms of ingredients and, where possible, are either vegetarian or vegan friendly. The Me Today range offers a modern solution to modern problems.
Me Today was founded by Grant Baker, Stephen Sinclair and Michael Kerr. Grant and Stephen have a long history of success in business start-ups, being involved in the successful listings of 42 Below and Ecoya, as well as Ecoya’s acquisition of skincare brand Trilogy, together with a significant investment in Turners Automotive Group. Michael has a vast amount of experience in the healthcare and wellness sectors and was responsible for establishing the Swisse brand in NZ and, more recently, was the general manager of the skincare brand, Trilogy.
Grant, Stephen and Michael joined forces to create Me Today as they believe there to be significant opportunity for a new brand in the wellness space. Both the Supplements and the Natural Skincare categories in NZ and overseas have experienced significant growth in recent years. The new venture has been launched with supplements and skincare as the platform but the founders see significant opportunity to further expand the product offering and take advantage of new trends within the health, beauty and wellbeing spaces.
The Me Today supplement and natural skincare ranges have recently launched into New Zealand pharmacy through the Green Cross Health network of Unichem and Life Pharmacy stores. Green Cross Health has a network of 360 stores nationwide and Me Today expects distribution to reach 80% of these stores within six months. To date, Me Today is stocked in 120 Green Cross Health stores.
The founders believe there are significant opportunities to take the brand offshore and into markets such as Australia, North America, United Kingdom, Asia and China, through a cross border e-commerce model. Globally, $128 billion is spent on supplements1 every year and, in New Zealand, circa $150 million is spent on supplements and natural skincare in the Pharmacy channel.
Consumers are seeking mental and physical wellness solutions and seem to be, more than ever before, interested in natural options, particularly natural products from countries such as New Zealand.
The capital available in CSM Group, post completion, will help accelerate growth of existing products in New Zealand and other offshore markets as well as to provide capital to invest into new, unique product development.
In addition to Me Today, the founders have created The Good Brand Company Limited which was established to launch, sell and market additional brands. The Good Brand Company represents Me Today and other agency branded business and is seeking other agency brands to complement its existing activity. The Good Brand Company forms part of the transaction.
Transaction Structure
The transaction values both the Me Today and Good Brand Company businesses at $5.55 million including $1 million of cash, whilst the listed shell of CSM is valued at $2.1 million. CSM will satisfy the consideration required to buy The Good Brand Company Limited and Me Today Limited by an issue of 1,110,000,000 shares at an issue price of $0.005 per share.
CSM intends to undertake a placement of up to $500,000 at $0.005 per share to wholesale investors (the same price that applies to the issue to the Me Today vendors).
Separately, to ensure that existing CSM shareholders have an opportunity to maintain their shareholding without significant dilution, CSM intends undertaking a 1 for 2 renounceable rights issue at 0.005. Further details of the rights issue will be advised in due course.
CSM expects to raise $1.0 - $1.5m from the placement and the rights issue.
After the transaction, the Me Today founders will own approximately 60.8% of the ordinary shares in CSM. The founders’ shares will be placed in escrow for a period of 12 months from the settlement date.
Shareholder approval and timing
The transaction is subject to approval by the shareholders of CSM under the NZX Listing Rules and the Takeovers Code. CSM expects to send information to shareholders in mid-February 2020, to enable them to vote on the transaction at a shareholders’ meeting in mid-March 2020. The information provided to shareholders will include a listing profile of Me Today and an independent adviser report prepared to comply with requirements of the Takeovers Code and Takeovers Panel guidance.
Subject to the appropriate approvals, the completion date is expected to be 1 April 2020. At this time CSM would change its name to Me Today Limited. At completion, CSM is expected to have approximately $4 million in cash which will be used to fund further growth of the Me Today brand.
The board of the Company, post completion, will consist of the three Me Today founders with Grant Baker as the chair. Existing chair, Roger Gower, will remain as an independent director. In addition, there will be up to two new independent directors appointed.
ENDS

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