DEFA14A: Safety Shot to Acquire Yerba Brands Corp. in $20 Million Deal, Aiming to Dominate Wellness Beverage Market

Safety Shot, Inc. is set to acquire Yerba Brands Corp. for $20 million, combining wellness solutions with plant-based energy drinks to create a potential force in the beverage market.

Summary

• Safety Shot, Inc. has entered into a definitive agreement to acquire Yerba Brands Corp. for approximately $20 million.
• The acquisition aims to combine Safety Shot's wellness solutions with Yerba's plant-based energy drinks, targeting the healthy and functional beverage market.
• Yerba generated approximately $12 million in revenue for the fiscal year ending 2023.
• The deal involves Safety Shot acquiring all outstanding Yerba shares in exchange for 20,000,000 shares of Safety Shot common stock.
• Each Yerba shareholder is expected to receive 0.2918 of a Safety Shot share for each Yerba share held.
• The transaction is expected to close in the second quarter of 2025, pending customary closing conditions and regulatory approvals.
• Post-closing, Safety Shot shareholders are expected to own approximately 75.8% and former Yerba shareholders approximately 24.2% of the combined company.
• Safety Shot will pay up to $500,000 of Yerba's transaction expenses if the arrangement is consummated.

Sentiment

Score: 8

Explanation: The document expresses a positive outlook on the acquisition, highlighting potential synergies, market growth, and benefits for both companies. The management comments are optimistic, and the overall tone suggests confidence in the success of the transaction.

Positives

• The acquisition combines Safety Shot's wellness solutions with Yerba's plant-based energy drinks, creating a broader product portfolio.
• Yerba's established distribution network and customer relationships can be leveraged to expand Safety Shot's market reach.
• The transaction is expected to result in significant cost synergies through operational efficiencies and consolidation of key functions.
• The combined company will have a presence in both Canadian and U.S. markets, enhancing its ability to scale internationally.
• Yerba's leadership team brings expertise in product development, branding, and scaling distribution.
• The global plant-based energy drink market is projected to grow at a CAGR of 6.7% from 2024 to 2033, reaching a value of $10.5 billion by 2033.
• The global wellness market is expected to grow at a CAGR of 9.9% from 2020 to 2025, reaching a value of $7 trillion by 2025.

Negatives

• The completion of the acquisition is subject to customary closing conditions, including shareholder and regulatory approvals, and may not occur.
• The pending acquisition may divert the attention of management from day-to-day operations.
• Safety Shot stockholders and Yerba shareholders will have a reduced ownership and voting interest in the combined company.
• The issuance of a significant number of Safety Shot shares of common stock could adversely affect the market price of the Safety Shot common stock.
• Safety Shot and Yerba have incurred, and may continue to incur, substantial transaction fees and costs in connection with the Arrangement.

Risks

• The completion of the Arrangement is subject to a number of conditions precedent and may not occur.
• The market price of the Yerba common shares and Safety Shot common stock may be adversely affected if the Arrangement is not completed or is delayed.
• The Arrangement may be terminated in certain circumstances.
• The termination fees provided under the Arrangement Agreement may discourage other parties from attempting to acquire Yerba or Safety Shot.
• Completion of the Arrangement is uncertain given, among other things, the conditions precedent to the Arrangement.
• The pending Arrangement may divert the attention of management of Yerba and Safety Shot.
• Safety Shot stockholders and Yerba shareholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the Arrangement as compared to their current ownership and voting interest in the respective companies.
• The issuance of a significant number of Safety Shot shares of common stock could adversely affect the market price of the Safety Shot common stock.
• Safety Shot and Yerba have incurred, and may continue to incur, substantial transaction fees and costs in connection with the Arrangement.
• There are risks associated with securities litigation related to the Arrangement.

Future Outlook

The combined company aims to capitalize on the growing global market for healthy and functional beverages, with a diversified product portfolio and a commitment to innovation.

Management Comments

• John Gulyas, Chairman of SHOT, believes that this acquisition could be a significant revenue catalyst for Safety Shot on top of an expected revenue growth rate of 50% expected in Q4, versus Q3.
• Todd Gibson, Chief Executive Officer of Yerba, stated that they are thrilled to join forces with Safety Shot and leverage their expertise and resources to potentially accelerate their growth and that the Transaction will provide them with access to new distribution channels, expanded marketing capabilities, and valuable synergies that will look to benefit both brands.
• SHOT CEO Jarrett Boon stated that the Transaction is about more than just two companies coming together; it's about creating a new force in the wellness and beverage sector and that they are bringing together the best of both worldsSafety Shots expertise in wellness solutions and Yerbas strength in plant-based beveragesto create a company with significant potential.

Industry Context

The acquisition reflects a trend towards consolidation in the beverage industry, with companies seeking to expand their product portfolios and market reach in the growing wellness and functional beverage segment.

Comparison to Industry Standards

• The global plant-based energy drink market is projected to grow at a CAGR of 6.7% from 2024 to 2033, reaching a value of $10.5 billion by 2033 (Source: Market.us).
• The global wellness market is expected to grow at a CAGR of 9.9% from 2020 to 2025, reaching a value of $7 trillion by 2025 (Source: Global Wellness Institute).

Management Changes

Stakeholder Impact

• Shareholders of both Safety Shot and Yerba will be impacted by the transaction, with changes in ownership and voting rights.
• Employees of both companies may experience changes as a result of the integration of operations.
• Customers of both companies may benefit from a broader product portfolio and expanded distribution network.
• Suppliers and distributors may be affected by the consolidation of supply chains and marketing efforts.

Next Steps

• Obtain shareholder approvals from both Safety Shot and Yerba.
• Secure interim and final orders from the Supreme Court of British Columbia.
• Obtain regulatory approvals, including from the TSX Venture Exchange and Nasdaq.
• Ensure the issuance of Safety Shot shares is exempt from registration requirements under the U.S. Securities Act.
• Complete the transaction, expected in the second quarter of 2025.

Key Dates

Keywords

acquisition, yerba brands corp, safety shot inc, plant-based energy drinks, wellness beverages, merger, beverage industry