Happy Belly Signs Binding Agreement to Acquire 50% of SALUS Fresh Foods QSR Restaurant Chain

Rhea-AI Summary

Happy Belly Food Group Inc. (CSE: HBFG) (OTCQB: HBFGF) has signed a binding LOI agreement to acquire 50% of SALUS Fresh Foods, a QSR restaurant chain with nine locations in Ontario. This marks Happy Belly's third acquisition in 2024, bringing their total to eight restaurant brands and ten brands overall. SALUS Fresh Foods is experiencing a +19% increase in same-store sales YOY. The acquisition details include:

- Happy Belly will issue shares worth $300,000 for 50% ownership
- Estimated purchase price of 4x EBITDA
- Closing expected within 30-90 days
- Option to acquire remaining 50% in the future

This acquisition aligns with Happy Belly's strategy of consolidating emerging food brands and is expected to bring synergies in operations, franchising, and expansion opportunities.

Positive

• Acquisition of 50% stake in SALUS Fresh Foods, adding a new restaurant brand to Happy Belly's portfolio
• SALUS Fresh Foods experiencing +19% increase in same-store sales year-over-year
• Acquisition expected to be accretive and cashflow positive
• Potential for expansion of SALUS Fresh Foods beyond Ontario
• Synergies expected in operations, franchising, and shared resources

Negative

• Issuance of new shares for acquisition may lead to dilution for existing shareholders

Toronto, Ontario--(Newsfile Corp. - July 29, 2024) - Happy Belly Food Group Inc. (CSE: HBFG) (OTCQB: HBFGF) ("Happy Belly" or the "Company"), a leading consolidator of emerging food brands is pleased to announce it has signed as of July 26^th, 2024, a binding LOI agreement to acquire 50% of SALUS Fresh Foods and SALUS Fresh Foods Franchising Inc ("SALUS"), serving fresh bowls, sandwiches, wraps, soups, smoothies and healthy treats the whole family can enjoy.

SALUS Fresh Foods

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/6625/218090_bf5341f8d48da88b_001full.jpg

Happy Belly begins the back half of 2024 with the signing of its third (3^rd) acquisition this year. This marks another stride forward in our journey to becoming a leading consolidator of emerging food brands. This acquisition represents the incorporation of our eighth (8^th) restaurant brand, and our tenth (10^th) brand overall.

SALUS Fresh Foods, an asset light 100% franchised system, has nine (9) established street-front and food court real estate locations in Ontario. "When looking for an acquisition we look for the 3 P's: People, Product and Process. With co-founders Adam and David Spagnuolo of SALUS Fresh Foods, we found exactly that," said Sean Black, Chief Investment Officer of Happy Belly.

"In addition to meeting our criteria for people, product, and process, this acquisition aligns perfectly with the financial metrics and belly check criteria Happy Belly looks for in an acquisition, being debt free and cashflow positive. Once closed, this transaction, as part of our accelerated M&A program, will bring our current total operating count of corporate and franchised restaurants to thirty-eight (38) while having an additional 376 units in our development pipeline still to come. This is another significant achievement since launching our franchising program 16 months ago. It demonstrates our commitment to our shareholders and our executional excellence as we drive disciplined company growth to enhance shareholder value through strategic and accretive M&A."

SALUS Fresh Foods

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/6625/218090_bf5341f8d48da88b_002full.jpg

"This accretive acquisition checks a lot of boxes for Happy Belly, and enhances our ability to scale and integrate future healthy, clean food brands into our framework as we focus on scaling operations in 2024. SALUS Fresh Foods is experiencing a positive +19% increase in same store sales (SSS) YOY, and we anticipate further sales benefits as employees return to work in central business districts. Today SALUS only has locations in Ontario, so we look forward to helping SALUS expand beyond the border of Ontario across Canada very shortly. There are meaningful synergies that both SALUS and Happy Belly will immediately benefit from including integration into established operational frameworks such as real estate, franchising, accounting, insurance, purchasing, supplier contracts, rebate systems, shared resources and marketing staff for increased labour and productivity efficiencies, and more. Our approach has always been to focus on the development and growth of emerging brands in the food sector."

SALUS Fresh Foods

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/6625/218090_bf5341f8d48da88b_003full.jpg

Acquisition Details
Happy Belly and SALUS Fresh Foods have signed a binding LOI agreement for the 50% acquisition of SALUS Fresh Foods by Happy Belly.

Happy Belly will issue such number of common shares of Happy Belly equal in value to $300,000 (based on a 10-day VWAP) at time of closing for 50% ownership of SALUS Fresh Foods, representing an estimated purchase price of 4x EBITDA. The Company anticipates the closing of this agreement to take place within the next 30-90 days. Happy Belly has also obtained the rights to acquire the remaining 50% of the business at its optionality.

For franchising inquiries please see www.happybellyfg.com/franchise-with-us/ or contact us at hello@happybellyfg.com.

About SALUS Fresh Foods
Fresh, Healthy, Made from Scratch, Delicious. Everyday our team is slicing, dicing, roasting, marinating, saucing, and having fun while ensuring that every meal is fresh, simple, and delicious. Salus locations are ideally selected in the heart of large urban areas fed by mass transit, with access to busy professionals, students, and families who are in need of a quick and healthy meal.

About Happy Belly Food Group
Happy Belly Food Group Inc. (CSE: HBFG) (OTCQB: HBFGF) ("Happy Belly" or the "Company") is a leading consolidator of emerging food brands.

Happy Belly

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/6625/218090_bf5341f8d48da88b_004full.jpg

Happy Belly Food Group
Shawn Moniz
Founder, Chief Executive Officer

FOR FURTHER INFORMATION, PLEASE VISIT:

www: www.happybellyfg.com or email hello@happybellyfg.com
If you wish to contact us please call: (604) 737-2303

Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this press release, which has been prepared by management.

Cautionary Note Regarding Forward-Looking Statements

All statements in this press release, other than statements of historical fact, are "forward-looking information" with respect to the Company within the meaning of applicable securities laws. Forward-Looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur and include the future performance of Happy Belly and her subsidiaries. Forward-Looking statements are based on the opinions and estimates at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. There are uncertainties inherent in forward-looking information, including factors beyond the Company's control. There are no assurances that the business plans for Happy Belly described in this news release will come into effect on the terms or time frame described herein. The Company undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. For a description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's Management's Discussion and Analysis and other disclosure filings with Canadian securities regulators, which are posted on www.sedarplus.ca.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/218090

FAQ

What is the acquisition target for Happy Belly Food Group (HBFGF)?

Happy Belly Food Group (HBFGF) has signed a binding LOI agreement to acquire 50% of SALUS Fresh Foods, a QSR restaurant chain specializing in fresh bowls, sandwiches, wraps, soups, smoothies, and healthy treats.

How many locations does SALUS Fresh Foods currently operate?

SALUS Fresh Foods currently operates nine established street-front and food court real estate locations in Ontario, Canada.

What is the purchase price for the 50% stake in SALUS Fresh Foods?

Happy Belly will issue common shares equal in value to $300,000 for the 50% ownership of SALUS Fresh Foods, representing an estimated purchase price of 4x EBITDA.

When is the SALUS Fresh Foods acquisition expected to close?

The acquisition of SALUS Fresh Foods by Happy Belly Food Group (HBFGF) is expected to close within 30-90 days from the announcement date of July 29, 2024.

What is the current same-store sales performance of SALUS Fresh Foods?

SALUS Fresh Foods is experiencing a positive +19% increase in same-store sales (SSS) year-over-year, according to the announcement.