International Vapor Group acquired for combination of upfront cash, promissory note, stocks and earnout

It was announced on September 6, 2018 that the leading U.S. other tobacco products provider, Turning Point Brands, Inc. (NYSE:TPB), acquired 100% of Florida-based International Vapor Group, Inc. in a deal worth $29 million. Under the terms of the deal, Turning Point paid $15 million in cash upfront, $4 million in the form of an 18-month unsecured promissory note, 0.15 million shares of Turning Point common stock worth $5 million, and $4.5 million in the form of an earnout, at the end of 2 years. At closing, the 0.15 million shares of Turning Point stock were exchanged for 0.34 million shares of previously issued Class A common stock of Standard Diversified, Inc., Turning Point’s direct parent.

For the trailing twelve months ending June 30, 2018, International Vapor reported revenue and EBITDA of $47.7 million and $4.9 million, respectively, translating to an acquisition revenue multiple of 0.60 and EBITDA multiple of 5.82.

International Vapor was founded in 2012 to capture the market of those traditional cigarette smokers looking for a smarter alternative – no smoke, ash, tar, or smell. International Vapor provides its electronic cigarettes under several brand names, including VaporFi, South Beach Smoke, and DirectVapor, all of which are free of tobacco, smoke, and combustion.

Turning Point expects the acquisition to be accretive immediately. Additionally, due to the acquisition, Turning Point’s 2018 net sales are expected to be lower by $5.0 million as Turning Point consolidates underperforming overlapping business channels. Turning Point President and CEO, Larry Wexler, stated, “The scale created via the combination of IVG and TPB family of vapor businesses will provide significant synergies in logistics, marketing and sourcing, which ultimately will benefit our consumers.”

About PierCap Partners:

We are a mergers and acquisitions (M&A) investment bank based in San Diego. M&A is our singular focus. Whether you are thinking of acquiring / selling a business, or taking some chips off the table, we run a well-disciplined process that secures best possible value, minimizes disruption and manages the delicate balance and spirit of collaboration. With over $2 billion in aggregate transaction value and 35+ years of combined experience, our leaders bring operational expertise, an owner’s perspective, and Wall Street solutions to you. Find out more about our focus, services and experience.

 

Sources:

https://markets.businessinsider.com/news/stocks/turning-point-brands-acquires-international-vapor-group-1027513557

https://www.bizjournals.com/louisville/news/2018/09/06/turning-point-brands-makes-multimillion-dollar.html

http://www.turningpointbrands.com/investor-relations/news-releases/2018/09-06-2018-130402182