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EMERGE Completes Sale of WholesalePet for $9.25M, Expects Cost Savings Related to Streamlined Business

By Pet Age Staff//January 31, 2024//

EMERGE Completes Sale of WholesalePet for $9.25M, Expects Cost Savings Related to Streamlined Business

By: Pet Age Staff//January 31, 2024//

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Press release: EMERGE Commerce

EMERGE Commerce Ltd., a premium e-commerce brand portfolio, recently announced that, further to its press release dated January 24, it has successfully completed the sale of its indirect subsidiary corporation, Retails Store Networks, Inc. dba WholesalePet.com (WSP) to Tiny Fund I, LP pursuant to a share purchase agreement dated January 23 between the buyer, WSP and Emerge US Holdings LLC, a subsidiary of the company, as amended by an amending agreement to the agreement dated January 31 between WSP, the buyer, Emerge US and the company.

Ghassan Halazon, Founder and CEO of EMERGE commented, “While we remain big fans of WholesalePet, we believe there is no larger priority than paying down debt and reducing interest expense to position the Company for long-term success, with a focus on growing our go forward businesses. Between over $5M of operating income generated by our WholesalePet investment to date and the $9.25 million sale price, we have made a modest gain on a cash basis, however we expect the real benefit will come from our CA$10M debt paydown and subsequent interest savings ahead. We wish Tiny all the best with this long-standing pet brand, and with the terrific WholesalePet team that continues on with them.”

Pursuant to the terms of the agreement and the amending agreement, Emerge US transferred all of the issued and outstanding shares in the capital of WSP to the buyer, a private partnership of Tiny Ltd., for aggregate gross cash consideration of $9.25 million, subject to certain closing and post-closing adjustments, payments and obligations.

Following the transaction, EMERGE will retain four brands across two main verticals, Grocery and Golf, in Canada and the U.S., namely truLOCAL, Carnivore Club, UnderPar and JustGolfStuff.

EMERGE expects further HQ cost reductions, given the reduced overheads required to service the go-forward brand portfolio.

“Looking ahead, we are optimistic about our go forward grocery and golf businesses, as we shift our focus to driving organic growth in 2024 and beyond. In parallel, we plan to extract additional savings in the near-term, as we reduce HQ costs in relation to servicing WholesalePet, and generally, with this more focused vertical strategy,” continued Halazon.

truLOCAL, a premium meat subscription / grocery brand, is EMERGE’s largest business by revenue. truLOCAL experienced i stmost significant increase in profitability in 2023, following various cost savings initiatives and gross margin improvements over the last 15 months. Carnivore Club, a premium artisanal subscription brand, is housed under truLOCAL.

EMERGE also operates a golf vertical, across Canada and the U.S., which includes UnderPar, its discounted experiences/ tee-times business, and JustGolfStuff, its fast-growing golf products and apparel business. EMERGE has utilized the majority of the transaction proceeds to pay down its senior credit facility with its existing lender, the principal balance of which has been reduced to C$5.85 million from C$15.85 million prior to the completion of the transaction, and C$25 million originally. The company’s interest expense savings following the aforementioned debt repayment is expected to be approximately C$1.38 million annually. Following the transaction, EMERGE no longer has any deferred payment obligations owed to WSP shareholders.

INFOR Financial Inc. acted as the exclusive financial advisor to EMERGE in connection with the transaction.

Tiny is a Canadian-based investment company focused primarily on investing and acquiring majority stakes in businesses that it expects to hold over the long-term.

 

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