Energy drink producer Yerbaé surges 20% after announcing acquisition by competitor
On Wednesday, January 8, shares of plant-based energy drink producer Yerbaé Brands Corp spiked more than 20% to hit a four-month high following the announcement of its acquisition by U.S.-based beverage maker Safety Shot. Meanwhile, Safety Shot stock plummeted following the news. The transaction values Yerbaé at more than $15 million in equity value.
Details
On Wednesday, Yerbaé stock jumped more than 20% on the TSX Venture Exchange in Canada to $0.2 per share, the highest closing price since mid-September. However, the stock has dropped more than 82% over the last 12 months.
Earlier in the day, Yerbaé announced an agreement to be acquired by Safety Shot, the producer of Sure Shot, a drink that, according to the company, can lower blood alcohol content in as little as 30 minutes. The merger will result in a combined company. The deal involves no cash with Yerbaé shareholders receiving about 20 million Safety Shot shares. Upon completion of the merger, Safety Shot shareholders will own approximately 75.8% of the combined company, while former Yerbaé shareholders will hold about 24.2%.
The price of offered Safety Shot shares corresponds to an equity value of $15.2 million and an enterprise value (recall: in addition to the share price, enterprise value takes into account a company’s ability to generate cash flow and other metrics) of $19.7 million, according to the companies’ press release.
The combined company will be led by Safety Shot’s existing management team, while Yerbaé’s leadership team will take on “secondary management roles,” as stated in the latter’s press release. The deal, still subject to Yerbaé shareholders’ approval, is expected to close in the second quarter of 2025. After that, Yerbaé shares will cease trading on the Canadian exchange.
On Wednesday, Safety Shot stock plunged more than 10% to $0.66 per share after the news of the Yerbaé acquisition dropped before extending the decline in after-hours trading.
About the deal and the participants
Founded in 2017 by Todd and Kerry Gibson, Yerbaé produces energy drinks with yerba mate and other plant-based ingredients. The company states that its beverages are zero calorie, zero sugar, non-GMO, gluten-free, and diet-friendly.
Safety Shot, in its current form, came about in 2023 after health product developer Jupiter Wellness acquired the operating assets of UK-based GBB Drink Lab, including the blood alcohol detox drink, Safety Shot. In the fourth quarter of 2024, Safety Shot rebranded as Sure Shot, though the holding company retained the original name.
“The transaction is about more than just two companies coming together; it’s about creating a new force in the wellness and beverage sector,” Shot CEO Jarrett Boon was quoted as saying in the press release. “We are bringing together the best of both worlds — Safety Shot’s expertise in wellness solutions and Yerbaé’s strength in plant-based beverages — to create a company with significant potential.”
Safety Shot expects the merger to provide access to new markets and retail channels, diversify its product offerings, and strengthen its financial position, as noted in its press release. Yerbaé also expects to reap significant benefits, including access to potential growth capital and resources, enabling it to expand its operations and product development initiatives.
In January–September 2024, Safety Shot’s sales came in at $2.55 million, 26 times the amount in the previous-year period. However, its net loss nearly quadrupled to $35.88 million.
