Eshbal firms up Dare to be Different acquisition

Executive Summary

• Eshbal Functional Food Inc. has signed a definitive share purchase agreement to acquire a 55% majority interest in Dare to be Different Foods Inc. (D2BD), a US-based gluten-free food company.
• The transaction involves a combination of cash and equity consideration, with Eshbal paying $248,000 USD in cash and issuing 1.2 million of its own shares valued at $180,000 USD.
• The acquisition is part of Eshbal’s strategy to expand its North American footprint and consolidate brands in the gluten-free and "better-for-you" market segments.

Key Details

• Transaction Structure: Eshbal acquires 55% equity stake in D2BD.
• Cash Consideration: Aggregate cash payment of $248,000 USD.
  • Initial payment due on closing.
  • Remaining payments to be made over a 12-month period.
• Equity Consideration: Issuance of 1.2 million common shares of Eshbal to D2BD shareholders.
  • Valued at $180,000 USD.
  • Issue price set at 15 US cents per share (noted as 21 cents on a pro-rata basis based on the last closing price on the TSX Venture Exchange prior to execution).
• Earn-out Provision: Eshbal may issue additional shares to D2BD shareholders subject to the attainment of certain performance milestones over a two-year period from closing.
• Target Company Profile (D2BD):
  • Specializes in gluten-free, vegetable-forward food products (pizzas, gnocchi, crisps made from cauliflower and broccoli).
  • Products available in over 500 stores, including Walmart locations in New York and local stores in New York, New Jersey, and Connecticut.
• Closing Conditions:
  • Entry into a consulting agreement with a key D2BD executive.
  • Receipt of regulatory approvals, including TSX Venture Exchange.
  • Representations and warranties remaining true and correct.
  • Completion of covenants and obligations.
• Expected Closing: Early December 2025.
• Share Restrictions: Issued shares are under prospectus exemptions (National Instrument 45-106) with a statutory hold period of four months and one day.
• Fees: No finders' fees payable.
• Liabilities: Eshbal is not assuming any long-term liabilities of D2BD.
• Strategic Rationale: Enhances access to synergistic product lines, retail distribution, local production facilities, and an experienced US management team.

Notable Quotes

• "Dare to Be Different Foods was built on simple, great-tasting ingredients and a fanatical focus on quality. Partnering with Eshbal opens the door to broader distribution, disciplined execution, as well as the resources to scale our most-loved products. We're excited about what this collaboration can unlock for retailers and consumers alike," — Marvin Jemal, Managing Director, Dare to be Different Foods.
• "The USA is the largest gluten-free market in the world, with growth continuing to be more than double that of overall grocery industry. This acquisition strengthens our North American footprint with a like-minded, high-quality brand," — Avi Markus, Chief Commercial Officer, Eshbal.