Wellness and Beauty Solutions (ASX: WNB) emerged from a trading halt this morning intent on reeling in “unrealised potential” via a completed acquisition of Organic Nation, a business that makes and sells a range of organic “cosmeceuticals” – cosmetic products with bioactive ingredients that have claimed medical benefits.
In addition, the lifestyle brand company has set forth plans that will see $3 million worth of its hand sanitiser products sold within the Australian auto industry, in partnership with Australian company CARE.
Currently, Organic Nation distributes a variety of anti-ageing skin and body care products, sold in more than 100 clinics outlets in Australia and Canada. Wellness and Beauty Solutions has pounced in acquiring the brand at an early commercial stage and will seek to integrate its popularity into its own brand line-up, in preparation for an eventual easing of COVID-19 lockdown conditions.
“There is unrealised potential in Organic Nation and we are confident that we can grow retail sales as the beauty sector start to reopen,” Wellness and Beauty Solutions managing director and chief executive officer Christine Parkes said.
“It’s an exciting product range that fits perfectly within our own philosophy of offering beautiful organic products that are scientifically backed to improve skin condition,” she added.
The acquisition will see Wellness and Beauty Solutions pay Organic Nation founders George and Vanessa Jilly $250,000 in shares with the cash payment of stock expected to be $120,000 and the remainder paid subject to performance milestones.
As a result of the deal, Mr Jilly will lead Wellness and Beauty Solutions’ True Solutions business as general manager of brand development while Ms Jilly will carry out a product trainer role.
After the first year, the company has agreed to pay a cash payment equal to 15% of total sales derived from Organic Nation products sold by True Solutions, with the maximum payment amount capped at $300,000.
In a statement, Wellness and Beauty Solutions stated it expected Organic Nation products to generate “around $250,000” in revenue over the rest of the current financial year, citing previous financial results and current sales forecasts.
Notwithstanding the COVID-19 pandemic, the company said it shared Organic Nation’s ambition of growing total annual revenue to $1 million “over the coming years”.
“The increase in revenue over the coming years is based on the company’s expectation from the benefit of the existing True Solutions network being leveraged. These benefits are attributed to being the owner distributer of the Organic Nation brand portfolio as opposed to being distributed by other third parties,” it said.
In addition to acquiring Organic Nation and extending its reach into selling organic cosmeceuticals, Wellness and Beauty Solutions is set to distribute MICRO19 hand sanitiser products across Australia – namely within the transport and infrastructure industries, two workplace areas that have become transmission hotspots throughout the pandemic.
Last week, the company signed a three-year distribution agreement with CARE Distributors to supply its proprietary MICRO19 hand sanitiser range exclusively in the transport and infrastructure sectors in Australia, including to automotive repairers and suppliers, transport and logistics centres and commercial product retailers.
The MICRO19 brand was launched in March 2020, purposefully named and branded to address the heightened demand for antiseptic products in both retail and industrial settings.
According to Wellness and Beauty Solutions, its MICRO19 products are effective against 99.99% of germs with its retail range already being provided at several allied health services locations and sold at major retailers such as Chemist Warehouse.
The terms of the deal state that CARE has been set a minimum sales target of $3 million with both parties able to terminate the agreement at any time.
“The transport and automotive industries remain a high-risk contact point for coronavirus transmission due to employee mobility and consumer contact in these sectors,” Ms Parkes said.
“We are pleased that, through this agreement with CARE, the full range of efficacious MICRO19 hand sanitiser products can be provided to Australian workers who need them,” she added.