EMERGE Completes Acquisition of BattlBox and Carnivore Club

• Transaction expected to nearly double EMERGE's net revenue and be immediately accretive to EBITDA
• BattlBox and Carnivore Club are EMERGE's 6^th and 7^th brands in North America, and are its largest and most profitable acquisitions to date
• BattlBox and Carnivore Club generated combined revenues of approximately US$23 million and Adjusted EBITDA of approximately US$3.3 million in the twelve months ended May 31, 2021
• Acquisition provides EMERGE with a strong US-based operating team with deep expertise in subscription e-commerce and cost-effective warehousing
• EMERGE CEO to host virtual webcast on Thursday, October 14 at 11:00 am ET  

TORONTO, Oct. 7, 2021 /CNW/ - EMERGE Commerce Ltd. ("EMERGE" or the "Company") (TSXV: ECOM), a leading acquirer and operator of direct-to-consumer ("D2C") e-commerce brands, announced today the successful closing of the previously announced acquisition of all the respective membership interest and shares of BattlBox, LLC ("BattlBox"), Carnivore Club, LLC and Carnivore Club Subscription Box Canada Inc. (collectively the "BattlBox Group"), (the "Transaction") for US$10.25 million in cash, US$1.5 million in deferred consideration payable over 3 years, and contingent earnout consideration of up to US$7.2 million over a 3-year period.

BattlBox (www.battlbox.com) is a market-leading outdoor, camping and survival goods subscription business based in the U.S., and notably, featured in its own Netflix Original show, "Southern Survival", in 2020. Carnivore Club (www.carnivoreclub.co) is a premium artisanal meat subscription business in Canada, with a presence in the U.S.

"What BattlBox has achieved by scaling their business to become a profitable market leader with no outside capital is a true testament to their discipline and operating model. BattlBox comes with a highly strategic team in the U.S., as well as cost-effective facilities, both of which we can leverage for our existing brands and future acquisitions. We are thrilled to complete this transaction and welcome the BattlBox team to the EMERGE family," said Ghassan Halazon, EMERGE Founder and CEO.

"EMERGE has a compelling track record of acquiring and operating terrific ecommerce brands, alongside proven management teams. We are excited to join the EMERGE family and leverage their extensive member database, data insights, M&A playbook, and shared services," said John Roman, BattlBox Group CEO.

On closing of the Transaction, EMERGE paid upfront consideration of US$10.25 million in cash. The upfront consideration was fully funded with cash on hand.

An additional US$1.5 million in deferred cash consideration shall be payable in three equal installments of US$500,000 on the first, second and third year anniversaries of the closing of the Transaction.

The closing consideration and deferred consideration, collectively, represent approximately 3.6 times Adjusted EBITDA, based on the BattlBox Group's unaudited financial statements for the twelve-month period ended May 31, 2021.

An earn-out of up to US$7.2 million may be payable based on minimum revenue and EBITDA growth targets of the BattlBox Group over three years, following the closing of the Transaction, with up to US$1.2 million in cash and another US$1.2 million in common shares of EMERGE (the "Earn-Out Shares") or cash, as decided at EMERGE's sole discretion, in each year of the earn-out period. All Earn-Out Shares will be subject to a 180-day lock-up and subject to such other terms as may be required by the TSXV. If EMERGE chooses to provide Earn-Out Shares, they shall be provided at a value equal to the 20-day volume-weighted average trading price of the common shares of EMERGE calculated on the day immediately prior to the day of the issuance of such shares.

The acquisition is expected to be immediately accretive to EMERGE, resulting in almost double the revenue and a considerable increase in adjusted EBITDA.

"BattlBox is a highly rated brand in its category, with over 3 million site visits in 2020. We plan to continue to execute against our robust acquisition pipeline and deliver other market-leading online brands to our diversified ecommerce portfolio," said Drew Green, EMERGE Chairman.

BattlBox is headquartered outside Atlanta, Georgia, with the Carnivore Club team based in Toronto, Canada.

EMERGE Webcast

EMERGE Founder and CEO, Ghassan Halazon, will be hosting a virtual corporate presentation on Thursday, October 14, at 11:00 am ET to discuss the BattlBox Group transaction, as well as the Company's progress and acquisition pipeline.

Webcast Details:

Link: https://us06web.zoom.us/webinar/register/WN_u83hNWLDSv2OejCpJI7HeQ

Webinar (Zoom) ID: 815 5347 5605

Passcode: 592430 

About EMERGE:

EMERGE is a disciplined, diversified, rapidly growing acquirer and operator of D2C e-commerce brands. Our network of e-commerce sites provide our members with access to premium meat, groceries, outdoor gear, golf, family offers and nearby escapes. Our portfolio houses some of North America's most coveted online destinations including trulocal.ca, BattlBox.com, CarinvoreClub.co, UnderPar.com, JustGolfStuff.ca, WagJag.com, and BeRightBack.ca. EMERGE was named one of the fastest growing companies in Canada by the Startup 50, and the Globe and Mail's 2020 Canada's Top Growing Companies.

To learn more visit https://www.emerge-commerce.com/

About BattlBox Group:

Founded in February 2015, BattlBox was 'first to market' offering outdoor, camping, and survival gear in a subscription box format. Every month, the BattlBox team delivers an expertly curated surprise box to their customers with the latest high-quality gear from both established and up-and-coming brands. Their leadership in the outdoor space led to their Netflix Original series "Southern Survival" which premiered in 2020. Carnivore Club was an established brand that the BattlBox team acquired in 2019.  Carnivore Club is the world's first subscription service featuring premium cured meats delivered to your door.  Getting a deal on Season 9 of Canada's "Dragons' Den" shortly after launch, Carnivore Club scours the globe sourcing celebrated artisans and featuring their products to its consumers.

To learn more, visit www.battlbox.com and www.carnivoreclub.co

Cautionary notice 

Investors are cautioned that any information released or received with respect to the transactions described herein may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

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.

Notice regarding forward-looking statements 

This press release may contain 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 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. 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 the risk factors discussed in the Company's filing statement which are incorporated herein by reference and 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.

Non-GAAP Measures

This press release makes reference to certain non-GAAP measures. These non-GAAP measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the financial information of the Company reported under IFRS. EBITDA and Adjusted EBITDA should not be construed as alternatives to net income/loss determined in accordance with IFRS. EBITDA and Adjusted EBITDA do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA as defined by management means earnings before interest and financing costs, income taxes, depreciation and amortization, transaction costs, foreign exchange gains/losses, discontinued operations, unrealized gains/losses on contingent consideration and share-based compensation. Management believes that Adjusted EBITDA is a useful measure because it provides information about the operating and financial performance of EMERGE and its ability to generate ongoing operating cash flow to fund future working capital needs and fund future capital expenditures or acquisitions.

SOURCE EMERGE Commerce Ltd.