Jeffs’ Brands Signs Non-Binding LOI to Merge Fort Products with a Publicly Traded Company Valued at Up to $12 Million

Rhea-AI Summary

Jeffs' Brands (Nasdaq: JFBR) has signed a non-binding Letter of Intent (LOI) to merge Fort Products , a UK-based private company, with Impact Acquisitions Corp, listed on the TSX Venture Exchange. Under the proposed agreement, Impact Acquisitions will acquire 100% of Fort Products' shares, with Jeffs' Brands receiving between 75.02% and 83.29% ownership of Impact's share capital based on milestone achievements.

The proposed acquisition values Impact at approximately CAD 4.85M (US$3.37M), including a minimum cash position of CAD 700K (US$486K) post-transaction costs. Fort Products is valued at approximately CAD 17.12M (US$11.91M), with a minimum required valuation of CAD 14M (US$9.73M). The transaction remains subject to due diligence, regulatory approvals, and specific conditions.

Positive

• Potential acquisition of majority stake (75.02-83.29%) in merged entity
• Fort Products valued at CAD 17.12M (US$11.91M)
• Minimum guaranteed valuation of CAD 14M (US$9.73M) for Fort Products

Negative

• Non-binding LOI subject to due diligence and conditions
• Transaction dependent on meeting predetermined milestones

Insights

Financial Analyst

The proposed merger represents a strategic move with significant valuation implications. Fort Products' potential valuation of up to $11.9M against JFBR's current market cap of $4.4M suggests substantial value creation potential. The structure, giving JFBR 75.02% to 83.29% ownership in Impact Acquisitions, effectively provides a backdoor listing for Fort Products while maintaining JFBR's controlling interest. The minimum valuation requirement of $9.7M CAD provides a solid floor price, protecting JFBR's interests. The deal's structure through a Canadian capital pool company (CPC) is a cost-effective way to achieve public listing, typically involving lower regulatory hurdles than traditional IPOs. However, investors should note this is a non-binding LOI with several contingencies, including due diligence and regulatory approvals, which introduces execution risk.

M&A Legal Expert

This non-binding LOI presents a complex three-way transaction structure utilizing a Canadian capital pool company mechanism. The milestone-based ownership structure provides performance incentives while protecting all parties' interests. Key legal considerations include the cross-border nature of the deal (Israel-UK-Canada), which will require multi-jurisdictional regulatory compliance. The valuation floor of $9.7M CAD acts as a material adverse change protection. The transaction's contingent nature on Impact's minimum cash position of $486,330 suggests careful structuring to ensure adequate working capital post-merger. The deal's success hinges on satisfying conditions precedent, including regulatory approvals from both TSX Venture Exchange and likely Israeli authorities given JFBR's Nasdaq listing. This intricate structure indicates sophisticated deal engineering to maximize tax efficiency and regulatory compliance.

Tel Aviv, Israel, Jan. 03, 2025 (GLOBE NEWSWIRE) -- Jeffs' Brands Ltd (“Jeffs’ Brands” or the “Company”) (Nasdaq: JFBR, JFBRW), a data-driven e-commerce company operating on the Amazon Marketplace, has signed a non-binding Letter of Intent (LOI) for the potential merge Fort Products Limited, a UK-based private company, with Impact Acquisitions Corp., a capital pool company listed on the TSX Venture Exchange.

Under the proposed share exchange agreement, Impact Acquisitions will acquire 100% of Fort Products’ shares. Jeffs Brands will receive between 75.02% and 83.29% ownership of Impact share capital, contingent upon meeting predetermined milestones.

The Proposed Acquisition is based on a total value of Impact of approximately 4,846,262 CAD (approximately 3,368,375 $US) (considering its cash position of at least 700,000 CAD (approximately 486,330 $US), after transaction costs) and a total value ascribed to Fort Products, of approximately 17,124,600 CAD (approximately 11,906,100 $US).

Impact's board of directors will order a valuation of Fort Products, and a condition for the Proposed Transaction is that the value of Fort Products will not be less than a minimum amount of 14,000,000 CAD (approximately 9,733,920 $US).

The transaction is subject to due diligence, regulatory approvals, and the satisfaction of specific conditions.

About Jeffs’ Brands Ltd.

Jeffs' Brands aims to transform the world of e-commerce by creating and acquiring products and turning them into market leaders, tapping into vast, unrealized growth potential. Through the Company’s management team’s insight into the FBA Amazon business model, it aims to use both human capability and advanced technology to take products to the next level. For more information on Jeffs’ Brands Ltd visit https://jeffsbrands.com.

Forward-Looking Statement Disclaimer

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “should,” “could,” “seek,” “intend,” “plan,” “goal,” “estimate,” “anticipate” or other comparable terms. For example, we are using forward-looking statements when discussing the potential merger of Fort Products with Impact Acquisitions, the projected valuations, ownership percentages, and conditions required for the transaction. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our ability to adapt to significant future alterations in Amazon’s policies; our ability to sell our existing products and grow our brands and product offerings, including by acquiring new brands; our ability to meet our expectations regarding the revenue growth and the demand for e-commerce; the overall global economic environment; the impact of competition and new e-commerce technologies; general market, political and economic conditions in the countries in which we operate; projected capital expenditures and liquidity; the impact of possible changes in Amazon’s policies and terms of use; the impact of the conditions in Israel, including the recent attacks by Hamas, Iran, and other terrorist organizations; and the other risks and uncertainties described in the Company’s Annual Report on Form 20-F for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (“SEC”), on April 1, 2024 and our other filings with the SEC. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Investor Relations Contact:

Michal Efraty
Adi and Michal PR- IR
Investor Relations, Israel
michal@efraty.com

FAQ

What is the value of Fort Products in the JFBR merger deal?

Fort Products is valued at approximately CAD 17.12 million (US$11.91 million) in the proposed merger deal.

What percentage ownership will JFBR receive in Impact Acquisitions?

Jeffs' Brands will receive between 75.02% and 83.29% ownership of Impact Acquisitions' share capital, depending on meeting predetermined milestones.

What is the minimum required valuation for Fort Products in the JFBR merger?

The minimum required valuation for Fort Products is CAD 14 million (approximately US$9.73 million).

What conditions must be met for the JFBR-Fort Products merger to complete?

The transaction is subject to due diligence, regulatory approvals, and satisfaction of specific conditions, including a minimum valuation requirement for Fort Products.