Sibannac, Inc. and Stellar Chemical Corp. (“Stellar”), a New Jersey based nutraceutical and industrial chemical manufacturer, have entered into a Memorandum of Understanding for Sibannac to acquire 51% of Stellar in a stock and cash transaction.
Stellar is currently profitable, grossing $4.5 Million in annual revenue from business to business as well as business to consumer sales, through direct contract manufacturing and online. The transaction contemplates a $10 Million acquisition, consisting of $2 Million in cash and the remainder in a new class of preferred, restricted stock, convertible to common shares between $.75-$1.00. Management anticipates that based on current earnings and the synergy of both companies, there will be a positive effect on the share price, as all the stock issued will be preferred and restricted from sale, having no initial dilutive effect on the common stock and thereafter subject to restriction under SEC Rule 144.
“This acquisition presents tremendous value for both companies as Stellar has vast experience in making the products for markets that Sibannac is going into now. Stellar’s capabilities are very advanced and having the manufacturing and know-how in place already will save a lot of time and investment,” said, David Mersky, CEO of Sibannac.
Stellar Chemical Corp.
Michael Dipiero, the company’s founder, has been in the industry for 23 years. Stellar Chemical Corp., based in Linden, New Jersey, is a chemical distributor that offers many industrial products, specializing in a large variety of items for laboratory use, pharmaceutical, personal care, food products, cosmetics, plastics, colorants, and nutritional. Stellar operates an FDA registered, Kof-K Kosher certified facility, and is shipping orders throughout the United States. The facility is also certified for and is currently manufacturing OTC drug products and Sibannac is engaged with a large-scale medical client to produce an OTC drug at this time.
The company is currently installing “gummy” manufacturing and filling equipment and is envisioned to produce and fill future orders generated by Sibannac. Stellar has over $1,000,000 of PP&E and $500,000 in capital expenditure in manufacturing equipment, alleviating Sibannac of a significant financial burden. Stellar excels in product formulation and custom flavoring blends, which will allow Sibannac to develop and manufacture proprietary gummy products as well as a full line of CBD-based goods. In addition, Sibannac is engaged with a leading CBD brand to develop and manufacture pet treats with complex formulations and Stellar is envisioned to provide the raw material to be used in that product line.
“We are excited to begin the merger process with David and his team. The synergy between both our companies makes this a perfect fit. Given Sibannac’s growing customer base coupled with our ability to fulfill orders of all shapes and sizes, we see this acquisition as huge success for the Sibannac shareholders.” said Michael DiPierro CEO of Stellar Chemical Corp.
Among Stellar’s manufacturing capabilities is beverage formulation and flavoring. Sibannac will work with Stellar’s team to create and produce new beverage products for NOHO, focusing on the relaunch of the NOHO Shot and Gold Can. The clear advantage to NOHO is that it does not have to finance any capital expenditures for manufacturing equipment and will enjoy the benefit of Stellar and Sibannac’s investment in these assets. This will allow NOHO to fill larger orders faster and create economy of scale without any direct investment. As NOHO is engaged in developing cutting-edge products like Kratom and Delta-8, the plan is to utilize both manufacturing facilities to achieve efficiencies. Stellar has prior experience in the Kratom market. NOHO is also developing an e-commerce solution for the sale of these products which are difficult to process through conventional credit card transactions. Detail on the solution will be forthcoming in a separate disclosure from the company directly.
The parties are engaging in a due diligence period for thirty days and will be issuing a $250,000 convertible note to Stellar as a break-up fee after the diligence period expires, but will be cancelled upon the successful closing of the transaction.
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