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Vapor to Purchase the Operations of International Vapor Group [Manufacturing Close - Up](Manufacturing Close - Up Via Acquire Media NewsEdge) Vapor Corp., a U.S.-based electronic cigarette and vaporizer company, announced that on May 14, it entered into an asset purchase agreement with International Vapor Group, Inc. and certain of its subsidiaries to purchase IVG's e-commerce, wholesale and retail operations by acquiring substantially all of IVG's assets and assuming certain of its liabilities. In a release dated May 15, the Company said under the terms of the purchase agreement, Vapor has agreed to pay IVG at closing approximately $20.8 million, of which approximately $1.7 million will be in cash and the remaining $19.1 million in 3,300,501 shares of Vapor common stock (based on a price of $5.787 per share which represents the 30-trading day weighted average closing price of Vapor common stock, as reported on the OTC Bulletin Board preceding May 14, the date of the purchase agreement). Vapor has also agreed to pay IVG an earn-out aggregating up to $29.2 million in shares of Vapor common stock. Earn-out payments are contingent and based upon the post-closing performance of IVG's e-commerce, wholesale and retail operations during the earn-out period specified in the purchase agreement. IVG's retail operations include eight Company owned Vapor Zone retail stores, six of which were opened in the first quarter 2014, the brands South Beach Smoke, Eversmoke and Vapor Zone, and Vapor Zone Franchising, a subsidiary that will conduct the franchising of Retail Stores. IVG's principal owners and operators Nicolas Molina and David Epstein have agreed to become part of Vapor's management team responsible for IVG's continuing e-commerce, wholesale and retail operations. Molina will serve as Senior Vice President of Retail and e-Commerce and Epstein will serve as Vice President of Wholesale. Completion of the acquisition is subject to Vapor obtaining stockholder approval for issuance of the shares of its common stock that will be issued at closing as part of the purchase price and thereafter as earn-out payments, as well as additional customary closing conditions. Vapor expects to complete the acquisition as soon as possible but not later than July 31. "IVG brings to Vapor Corp. an established online customer base and distribution channel that includes its own branded retail store operations under the name Vapor Zone. We are excited to have Mr. Molina head up these divisions. His previous experience as an owner and co-founder of Let's Talk Cellular and Wireless, Inc., where he opened 289 stores, will prove invaluable," said Jeff Holman, Chairman, President and CEO of Vapor Corp. "With the stability for Internet sales recently provided by the promulgation of the FDA's proposed regulations, Vapor Corp. is very excited to be able to react quickly and have the opportunity to take part in this segment of the market, where gross margins are substantially higher than in wholesale distribution. Mr. Molina's plan of re-launching Vapor Corp.'s existing online stores, to work in concert with IVG's websites, will immediately make Vapor Corp. a much more significant player in the internet sales channel. "Vapor Corp. and IVG have similar business strategies that we believe offer significant economies of scale. Outside of the top five companies, the electronic cigarette and vaporizer industry is highly fragmented, which represents a tremendous opportunity for Vapor Corp. to strategically acquire companies that are complimentary to and allow us to further diversify our product offering and distribution channels." Nicolas Molina, CEO of IVG, said, "We are very excited to join forces with Vapor Corp. to create an exciting multi-pronged strategy that includes an industry-leading online presence, nationally ranked wholesale distribution and award-winning company-owned brick and mortar stores. Individually we were both successful, but together we will enhance our positions as industry leaders. "We are especially eager to leverage Vapor Corp.'s reach as we continue to expand the retail footprint for our EverSmoke and South Beach Smoke brands, including our new South Beach Smoke Air tank system. We are also excited to leverage Vapor Corp.'s management's expertise and access to the capital markets to help fund the anticipated growth of Vapor Zone stores." ((Comments on this story may be sent to [email protected])) (c) 2014 ProQuest Information and Learning Company; All Rights Reserved. |