Happy Belly Signs Definitive Agreement to Acquire 100% of Smile Tiger Coffee Roasters Inc

Rhea-AI Summary

Happy Belly Food Group (CSE: HBFG) (OTCQB: HBFGF) has signed a definitive agreement to acquire 100% of Smile Tiger Coffee Roasters, marking its entry into the coffee sector. The acquisition, valued at $250,000 (split between shares and cash), represents approximately 3.3x EBITDA based on Smile Tiger's projected 2024 sales exceeding $1,000,000.

Smile Tiger operates as a corporate-owned retail location in Kitchener, offering walk-in service, nationwide online sales of consumer-packaged goods (CPG), and white-label products. As a coffee roaster, it enables large-scale commerce opportunities, including supplying Happy Belly's existing brands across Canada.

The acquisition aligns with Happy Belly's consolidation strategy focusing on the '3 P's': People, Product, and Process. The company plans to leverage its leadership team's extensive coffee industry experience, including executives with backgrounds from Tim Hortons, Second Cup, and Balzac's Coffee, to drive immediate brand acceleration and integration.

Positive

• Cash-flow positive acquisition with no debt
• Low acquisition multiple at 3.3x EBITDA
• Projected 2024 sales over $1,000,000
• Enables vertical integration through coffee roasting capabilities
• Cross-selling opportunities across existing Happy Belly locations

Negative

• Shares dilution due to equity portion of acquisition payment

Toronto, Ontario--(Newsfile Corp. - January 8, 2025) - Happy Belly Food Group Inc. (CSE: HBFG) (OTCQB: HBFGF) ("Happy Belly" or the "Company"), a leading consolidator of emerging food brands is happy to announce that it has signed as of January 6^th, a definitive agreement to acquire 100% of Smile Tiger Coffee Roasters Inc ("Smile Tiger"), Happy Belly's first acquisition in the coffee sector.

Smile Tiger Coffee Roasters 1

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"Today is a big day for Happy Belly Food Group as we announce the 100% acquisition of our newest brand Smile Tiger to our growing list of emerging brands," said Sean Black Chief Executive Officer of Happy Belly. Entering the coffee & tea beverage category is something we have been exploring for some time, so finding our entry point with Smile Tiger is a great step forward. As we continue to execute on our consolidation strategy of brands that fit the 3 P's of People, Product and Process, we welcome the entry into a new category with so much room for sector consolidation as well as menu expansion. This is another significant achievement as it demonstrates our commitment to our shareholders to focus on value creation across our portfolio. Our mandate is to deliver disciplined organic growth as well as accretive M&A. We look forward to sharing detailed development plans for the brand post closing, but buying cash-flow positive brands that are debt free with positive same store sales is a low-risk plan that I want more of for our shareholders. The key here is what happens to the brand post closing in our hands. Our team continues to demonstrate how we can buy low risk cash-flow positive assets at reasonable multiples and then immediately expand the brands EBITDA. Just like we did with Heal Wellness, Lettuce Love Café, iQ Foods, Via Cibo, Rosie's Burgers, Yolks Breakfast & Pirho."

"Smile Tiger will operate as a corporate-owned retail location, catering to walk-in customers in the Kitchener region while also reaching a nationwide audience through its online offerings. These include both consumer-packaged goods (CPG) and white-label products. A key aspect of this acquisition is Smile Tiger's role as a coffee roaster, enabling large-scale commerce and broad market opportunities including supplying our own brands across the country. Having this market advantage in addition to delivering exceptional coffee and outstanding service, positions us to capitalize on the strong growth potential in the coffee, teas, bubble tea, energy drinks and refreshers vertical that we believe is currently disrupting the beverage category across North America."

Smile Tiger Coffee Roasters 2

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"We are excited about expanding our coffee capabilities, not only through both additional corporate and franchised retail locations but also in exploring opportunities to provide Smile Tiger products across our existing retail locations going forward. With our diverse portfolio of breakfast, lunch, and dinner brands, Happy Belly consumes a significant amount of coffee, making this expansion a natural fit for cross selling. The opportunity to broaden the footprint of our coffee brand-both in product offerings and physical reach-represents a significant growth avenue for us in 2025 and beyond. Thankfully we have significant bench strength in the coffee category within our leadership team. John Delutis brings experience from his time at Second Cup and Tim Hortons, Gary Fung previously served as Head of Finance and Strategy for Tim Hortons, and Randall Papineau successfully led Balzac's Coffee; so we anticipate the integration to be smooth and acceleration of the brand to be immediate "

Smile Tiger Coffee Roasters 3

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We are just getting started

Acquisition Details
Happy Belly and Smile Tiger Coffee Roasters have signed a definitive acquisition agreement for the 100% acquisition of Smile Tiger Coffee Roasters by Happy Belly. Happy Belly will issue such number of common shares of Happy Belly equal in value to $125,000 (based on a 10-day VWAP) at time of closing together with $125,000 in cash for 100% ownership of Smile Tiger Coffee Roasters, representing an estimated purchase price of 3.3x EBITDA based on 2024 sales of north of $1,000,000. The Company anticipates the closing of this agreement to take place within the next 30 days.

About Smile Tiger Coffee Roasters Inc.
Our coffee brand is built on the art of unique, in-house roasting. By sourcing premium, ethically grown beans from around the globe, we ensure every cup delivers unparalleled freshness and flavor. Our expert roasters meticulously craft each batch, unlocking the distinct profiles and aromas that set us apart. From rich, bold blends to delicate, nuanced single origins, our roasting process is a celebration of coffee's diversity. Committed to sustainability and quality, we bring you an exceptional coffee experience, roasted to perfection and tailored to delight even the most discerning coffee enthusiasts.

Franchising

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

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 Food Group

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Sean Black
Chief Executive Officer

Shawn Moniz
Chief Operating 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/236407

FAQ

What is the total value of Happy Belly's (HBFGF) acquisition of Smile Tiger Coffee Roasters?

The total acquisition value is $250,000, consisting of $125,000 in cash and $125,000 in Happy Belly shares (based on 10-day VWAP at closing).

What is the expected EBITDA multiple for HBFGF's Smile Tiger acquisition?

The acquisition represents approximately 3.3x EBITDA multiple based on Smile Tiger's projected 2024 sales of over $1,000,000.

When is the expected closing date for HBFGF's Smile Tiger acquisition?

The acquisition is expected to close within 30 days from the January 6th, 2025 signing date.

What are the main business segments of Smile Tiger under HBFGF ownership?

Under HBFGF, Smile Tiger operates through retail location sales in Kitchener, nationwide online consumer-packaged goods (CPG) sales, and white-label products, plus coffee roasting operations.

How does the Smile Tiger acquisition fit into HBFGF's business strategy?

The acquisition aligns with Happy Belly's consolidation strategy of the '3 P's' (People, Product, Process) and enables vertical integration through coffee roasting capabilities while expanding into the coffee sector.