EMERGE Announces Signing of Definitive Agreement to Sell WagJag for $1M, Continues to Prioritize Strengthening Balance Sheet and Unlocking Savings
- EMERGE has entered into a definitive agreement to sell WagJag for $1M in cash
- EMERGE originally acquired WagJag for $500K in November 2017 from Torstar Corp.
- EMERGE anticipates the sale of WagJag to accelerate further HQ cost savings in relation to servicing the WagJag business
- Following the Transaction, EMERGE will retain 5 brands across 3 verticals (Pets, Grocery, Golf)
- The Company continues to explore additional strategic opportunities to strengthen the balance sheet, reduce debt, and improve the company's overall cash flow
TORONTO, July 24, 2023 /CNW/ - EMERGE Commerce Ltd. (TSXV: ECOM) ("EMERGE", or the "Company"), a diversified acquirer and operator of niche e-commerce brands, announces that a subsidiary of the Company, Emerge Brands Inc. (the "Seller"), has entered into a definitive asset purchase agreement (the "Agreement"), with 15124174 Canada Inc. (the "Buyer"), pursuant to which the Seller proposes to sell to the Buyer substantially all of the assets related to its WagJag and BeRightBack business (the "Transaction"). WagJag and BeRightBack operate a daily deals e-commerce business in Canada for discounted vouchers.
Ghassan Halazon, Founder and CEO of EMERGE commented, "The WagJag case study is now complete. In November 2017, we acquired a declining, loss-making business, and today, after a tremendous amount of work, the business is exhibiting strong double-digit sales growth lately combined with lean operations, a testament to the team's efforts. With our shifting priorities, we felt it was the right time to sell WagJag at a healthy premium to our original purchase price. Moving forward, we plan to double down on our largest, most profitable niche vertical opportunities. We expect this will result in further HQ savings in relation to servicing a more focused set of brands. We wish the new owners of WagJag all the best with this long-standing Canadian daily deals brand, and with the special team that continues on with them."
Pursuant to the Agreement and in consideration for the Transaction, the Buyer has agreed to pay cash consideration of $1,000,000 on closing of the Transaction ("Closing"), subject to certain closing adjustments.
EMERGE originally acquired WagJag for $500,000 in November 2017 form Torstar Corp. In 2022, WagJag had revenue of approximately $2M.
"The sale of WagJag is yet another positive step in strengthening the Company's balance sheet, which remains a top priority in the near-term. In recent years, we have amassed a valuable premium e-commerce brand portfolio, including multiple profitable businesses, and we will continue to relentlessly explore and prioritize favorable strategic tradeoffs that assist us in expediting our path to a healthier balance sheet, and ultimately towards driving stronger cash flows over the long run," continued Halazon.
Following the Transaction, EMERGE will retain 5 brands across 3 verticals (Pets, Grocery, Golf) in Canada and the U.S., namely WholesalePet, truLOCAL, Carnivore Club, UnderPar, and JustGolfStuff.
No finder's fees are expected to be paid in connection with the Transaction.
Subject to the satisfaction of all conditions precedent to the completion of the Transaction, Closing is expected to occur on or prior to August 25, 2023 or such other date as the Seller and the Buyer may agree. Closing of the Transaction is subject to, among other things, the receipt of third party and TSX Venture Exchange ("TSXV") approval, if and as required.
EMERGE is a diversified acquirer and operator of quality niche e-commerce brands in Canada and the U.S. Our subscription and marketplace e-commerce properties provide our members with access to offerings across our pets, premium meat/ grocery, and golf verticals. EMERGE was named one of Canada's Top Growing Companies by Globe and Mail in 2022 (and 2020), and one of the fastest growing companies in Canada by the Startup 50 in 2020.
To learn more visit https://www.emerge-commerce.com/
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This press release contains certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including, without limitation, statements related to the closing of the Transaction and the timing thereof, the satisfaction of all conditions precedent to the closing of the Transaction, including, without limitation, third party and TSXV approval in respect of the Transaction (if applicable), any benefit that may be derived by the Company from the Transaction, including, without limitation, any cost savings or other material benefit to the working capital or financial position of the Company as a result of the Transaction, as well as other statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. There is no guarantee the Transaction will be completed as contemplated or at all, and the forward-looking information contained herein is based on the assumptions of management of the Company as of the date hereof including, without limitation, assumptions with respect to the financial position and working capital of the Company, the ability of the Company to obtain TSXV approval for the Transaction (if applicable) and the satisfaction of any other conditions thereto, and the conditions of the financial markets and the e-commerce markets generally, among others. The Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its securities, or financial or operating results (as applicable). Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including risks related to the disposition of an operating business by the Company, risks that the benefits derived from the Transaction may not be as expected or that the Company may not see any benefit from the Transaction, risks that each party to the Agreement may not satisfy its obligations or covenants, risks that the Company may be subject to litigation as a result of the Transaction including allegations of misrepresentation or breach of conditions or covenants, risks that the TSXV or the Company's lender may not approve the Transaction, as well as the risk factors discussed in the Company's MD&A, and most recent Annual Information Form which are available through SEDAR at www.sedar.com. The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
On Behalf of the Board
Ghassan Halazon
Director, President, and CEO
SOURCE EMERGE Commerce Ltd.
Ghassan Halazon or Jonathan Leong, EMERGE Commerce Ltd., 416-479-9590, [email protected]
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