Selling stakes in a company is an operation that requires following an adequate strategy to obtain the highest profit and avoid possible inconveniences. After having carried out the necessary analysis, Greenlane Holdings has chosen to follow this process. The world’s leading seller of cannabis accessories and specialty vaporization products has recently announced the sale of its stake in VIBES Holding. The all-cash transaction is valued at $5.3 million.
The strategic sale comes to complement Greenlane’s moves to capitalize on the business and further accelerate its path to profitability. The firm decided to sell its stake in VIBES at an enterprise value of approximately one times the brand’s trailing 12-month revenues.
This translates to a figure significantly higher than the implied multiples reflected in the company’s public market capitalization. As a result, it may further reflect the cannabis leader’s belief that its shares remain undervalued under a “sum-of-the-parts” analysis.
The terms of the sale indicate that Greenlane will still retain intact distribution rights to VIBES products. In addition, it will still remain a key player in the company’s premium cigarette paper and apparel business.
Nick Kovacevich, CEO of Greenlane, commented that the team is extremely pleased to have brought in such a large amount of money through the sale. He says the company is pleased to see one of its brands being valued privately six times more than the business is seen in the public markets. Kovacevich promises that as the head of a distribution company, he will continue to support customers, while the balance sheet will be improved through the sale of this stake.
“We are very excited to complete this strategic transition,” said Berner, CEO of VIBES. “As a brand builder, we feel that VIBES is just scratching the surface, and its future trajectory is extremely compelling. We appreciate everything Greenlane has done as a partner to get VIBES to this level, and we look forward to leveraging their distribution expertise and vast customer network in the future as we continue to make VIBES a staple product on shelves around the globe.”