Stem Holdings, Inc. (OTCQX: STMH) is buying e-commerce and cannabis delivery company Driven Deliveries, Inc. (OTCQB: DRVD) in an all stock deal valued at $46 million. The combined company will be known as Driven By Stem and the new company will continue to trade under the symbol STMH on the OTC. It will maintain its headquarters at Stem’s current location in Boca Raton, FL. The deal is expected to be immediately accretive to earnings of Stem and should close in late 2020.
The company said that the acquisition is expected to increase scale to drive sales growth and bring cost savings estimated at $1.5 million in the first year through productivity initiatives, vertical supply chain efficiencies, and reduction and consolidation of overhead and administrative costs. The deal is not expected to increase debt levels.
“No other cannabis company has the breadth of top-shelf brands and convenience sought by cannabis consumers which Driven By Stem will offer,” stated Adam Berk, CEO of Stem. “We will apply Driven Deliveries’ technology, footprint, and distribution capability to all markets, and leverage our own licenses and retail dispensaries to service more consumers in every state in which we operate,” he continued. “We are excited about the unique opportunities that this combination creates as we build a better model to adapt to the changes in the cannabis marketplace and deliver shareholder value year over year,” he concluded.
Driven Deliveries is an e-commerce and DaaS (delivery-as-a-service) provider with proprietary logistics and omnichannel UX/CX technology which will make Driven By Stem a vertically-integrated cannabis company with a DaaS platform to meet the needs of all cannabis consumers in the markets it serves.
Christian Schenk, current Chairman and CEO of Driven Deliveries, has tendered his resignation effective October 4, 2020 to pursue other interests. Brian Hayek stated, “Merging with Stem completes our transition from an online cannabis technology company and delivery service to a vertically-integrated cannabis operator, and fast-tracks our expansion strategy into new states.” He concluded, “This is a defining moment in our history and is expected to expand our total addressable market and growth opportunities.”
Driven By Stem
The executive team will be as follows:
Adam Berk, Chief Executive Officer, and Chairman: Adam Berk is the current CEO of Stem and a member of Driven Deliveries’ Board of Directors. Adam Berk is the former CEO of Osmio (currently GrubHub), which was the first patented web-online food ordering system.
Steve Hubbard, Chief Financial Officer: Steve Hubbard is the current CFO of Stem.
Ellen Deutsch, EVP/Chief Operating Officer: Ellen Deutsch is the current Executive Vice President and COO of Stem. Ellen Deutsch was an executive of Hain Celestial for over 20 years prior to joining Stem.
Sal Villanueva, President: Sal Villanueva is the current President of Driven Deliveries.
Brian Hayek, Chief Compliance Officer & Special Projects: Brian Hayek is a co-founder and current Chief Financial Officer of Driven Deliveries.
Driven By Stem will integrate Driven Deliveries’ delivery capability and its robust technology in every state in which Stem currently operates, and add Stem’s iconic cannabis brands to Driven Deliveries’ platform of over 400 cannabis products. Stem’s brand offerings cover multiple cannabis product categories, particularly flower, extracts, edibles, and topicals with award-winning brands including TJ’s Gardens and Yerba Buena; Cannavore an edible brand; and Doseology, a CBD mass market brand launching in 2021. As a cannabis technology company, Driven Deliveries’ Budee and Ganjarunner e-commerce platforms will also partner with leading cannabis companies in new geographies to meet the demand for quick and accurate product deliveries. Initial operations will span nine states.