Aqua Bio Technology — M&A Activity 2023

Dec 19, 2023

Aqua Bio Technology ASA: Acquisition of Cover Brands Secures Significant Revenue Stream and 150k E-customers in line with ABT's growth strategy

Aqua Bio Technology ASA: Acquisition of Cover Brands Secures Significant Revenue Stream and 150k E-customers in line with ABT's growth strategy

19.12.2023 13:34:34 CET | Aqua Bio Technology ASA | Inside information

Aqua Bio Technology ("ABT" or the "Company" and together with its wholly owned

subsidiaries, the "ABT Group") has today, on 19 December 2023, entered into a

share purchase agreement ("Share Purchase Agreement") with Medvind Holding AS ("

Medvind") for the Company's acquisition of all the outstanding shares in the

Norwegian company Cover Brands AS ("Coverbrands") for a purchase price of NOK

16.5 million. The purchase price will be settled through the Company issuing

6,000,000 consideration shares at a subscription price of NOK 2.75 per

consideration share (the "Consideration Shares"). Medvind and its ultimate

owners have signed a lock-up undertaking for a period of 36 months with respect

to the Consideration Shares.

Concurrently, Jesper Dønnestad Brandt and an associated investor will each

subscribe for ABT shares for NOK 2.5 million at the same subscription price (the

"Investment Shares" and jointly with the Consideration Shares, the "New Shares

"). The NOK 5 million capital raised will be used to strengthen Coverbrands'

equity and access to credit lines.

Consummation of the acquisition of Coverbrands is expected to occur no later

than 22 December 2023. The New Shares will be issued pursuant to a board

authorization registered in the Norwegian Registry for Business Enterprises on

29 September 2023.

Coverbrands started as an e-commerce business, selling beauty products to

customer through the company's web shop and has today an e-commerce platform

with over 140,000 customers. Through social media and influencers, Cover Brands

has a combined reach of ~2 million users. Coverbrands has today become a

well-known brand in the cosmetic market, with a diverse range of product

offerings catering to a broad audience. In addition to the e-commerce business,

Coverbrands has successfully established B2B distribution channels to several

retail channels in Norway and Sweden

Coverbrands has also recently opened a flagship store in central Kristiansand,

where they share space with Pusterom Hudpleie AS ("Pusterom"), offering a

comprehensive beauty experience to consumers with products offerings and

treatments, with the daily management overseen by the CEO of Pusterom. The

ultimate owners of Coverbrands are major stakeholders in Pusterom through Ovalen

AS ("Ovalen"), alongside Jesper Dønnestad Brandt who co-founded the store chain

Normal Norge AS ("Normal Norge").

With this agreement, ABT and Coverbrands will secure the entire value chain from

production to the end users. The acquisition of Coverbrands coincides with ABT's

adopted strategy of securing larger distributors. Previously, ABT bought Cosmed

Beauty AS ("Cosmed Beauty "), Ultrabody AB ("Ultrabody") and Skinteam Norge AS

("Skinteam"). Through the acquisition of Coverbrands, ABT will have one of the

largest distributions towards B2B and B2C in the Nordics, where both Cosmed

Beauty, Ultrabody and Coverbrands will act as solid supporters of the Skinteam

model.

With Coverbrands' large revenue there are good opportunities to improve margins

and profitability for the ABT Group's business model. Coverbrands revenue was

above NOK 100 million in both 2021 and 2022 and is expected to surpass NOK 80

million in 2023. ABT expects that the acquisition of Coverbrands will provide

the ABT Group with significant synergies and benefits, including:

* Coverbrand will, together with Cosmed Beauty and Ultrabody, act as solid

supporters of the Skinteam business model, recruiting both new membership

stores and customers.

* Cosmed Beauty's demonstrated e-commerce expertise applied on Coverbrands'

large customer base is expected to yield significant synergies and further

growth.

* Coverbrands' presence in the Swedish market will facilitate market presence

and access for Skinteam and Ultrabody.

* Based on the successful model of Normal Norge, the ultimate owners of

Coverbrands and Jesper Dønnestad Brandt intend to establish new flagship

stores in Oslo, Bergen and Trondheim, where ABT will serve as a product

supplier to both Pusterom and such stores. ABT will be given an option to

acquire Ovalen.

* 3D Innovation Nordic AS has the same ownership as Pusterom and is a wholesale

company that is expected to benefit from having the ABT Group as a products

and private label supplier, providing growth and synergies.

* Coverbrands will be the main sponsor of Palmesus (https://www.palmesus.com/)

which has high visibility and engagement in the relevant market and

Coverbrands expects to be able to leverage ABT's and Skinteam's business

models during the festival.

ABT sees the acquisition of Coverbrands is a significant step in its

communicated consolidation strategy. Based on ABT's research, the Norwegian

beauty industry, with a cumulative turnover of close to NOK 22 billion, presents

a fragmented landscape where ABT sees potential for further market consolidation

and growth.

For any additional information, please visit:

* Cover Brand: https://www.coverbrands.no/

* Pusterom Hudpleie: https://pusteromhudpleie.no/

* Palmesus: https://www.palmesus.com/partnere

The Company has considered the issuance of the New Shares in light of the equal

treatment obligations under the Norwegian Securities Trading Act and the Oslo

Rule Book II, and notes that the issuance of the New Shares implies a deviation

from the pre-emptive rights of the Company's shareholders to subscribe for new

shares. The Board is of the view that the issuance of the New Shares complies

with the requirements for equal treatment, and that the deviation from the

pre-emptive rights is justifiable as the Consideration Shares are issued as

settlement for the acquisition of Coverbrands, and the net proceeds from the

Investment Shares enables the Company to increase Coverbrands equity and access

to credit lines, with the price per New Share set at a premium compared to the

latest closing price of the Company's shares, on Monday, 18 December 2023, which

was NOK 2,52.

****

For further information, please contact CEO Håvard Lindstrøm mobile phone +47

941 32 288.

Aqua Bio Technology (ABT) is developing and commercializing sustainable

biotechnology for use in skincare products. ABT's cosmetics ingredients are

highly effective and they provide the cosmetics industry with natural

alternatives to traditional ingredients. ABT is also marketing and distributing

natural skincare products developed by partners towards consumers and

professional users. ABT's focus on commercialization and development of natural

ingredients and natural skincare products has been, and will continue to be, an

important part of the Company's strategy going forward. Aqua Bio Technology is

listed on the Euronext Expand market of the Oslo Stock Exchange.

This information is considered to be inside information pursuant to the EU

Market Abuse Regulation and subject to the disclosure requirements pursuant to

section 5-12 of the Norwegian Securities Trading Act. This stock exchange notice

was published by CEO Håvard Lindstrøm on the date and time provided.

DISCLOSURE REGULATION

This information is subject of the disclosure requirements pursuant to section

of 5-12 of the Norwegian Securities Trading Act.

CONTACTS

* Håvard Lindstrøm, 004794132288, hl@aquabiotech.no

ABOUT AQUA BIO TECHNOLOGY ASA

Aqua Bio Technology (ABT) is developing and commercializing sustainable

biotechnology for use in skin care products. ABT's cosmetics ingredients are

highly effective and they provide the cosmetics industry with natural

alternatives to traditional ingredients. ABT is also marketing and distributing

natural skin care products developed by partners towards consumers and

professional users. Aqua Bio Technology is listed on Euronext Expand.

ATTACHMENTS

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