CEA Industries to acquire Fat Panda for C$18M

CEA Industries (CEAD) has signed an agreement to acquire Fat Panda, a Canadian retailer and manufacturer of nicotine vape products, for an aggregate purchase price of C$18M payable at closing. The Company will pay the purchase price with a combination of cash, CEA Industries common shares, and seller and bank debt. The structure of this accretive acquisition is designed to have minimal dilution to CEA Industries’ shareholders. The company said, “Fat Panda is central Canada’s largest retailer and manufacturer of e-cigarettes, vape devices and e-liquids, with a market share exceeding 50% in the region. The company operates 33 retail locations, including 29 Fat Panda stores and four Electric Fog vape outlets, in the provinces of Manitoba, Ontario and Saskatchewan. Fat Panda also serves a wide range of customers through its online e-commerce platform. Its retail footprint is complemented by a comprehensive portfolio of products, including its own line of premium e-liquids manufactured in-house, along with a robust portfolio of trademarks and intellectual property. Since its inception in 2013, Fat Panda has established a strong foundation that has fueled its growth in the vape industry and has positioned the Company for sustained expansion. By strategically locating retail stores in high-traffic areas and developing a robust e-commerce platform, Fat Panda has achieved broad market reach and customer accessibility. Its in-house product development also enables a diverse and cost-effective product portfolio that adapts to evolving consumer preferences. Additionally, Fat Panda benefits from strong supplier partnerships and management expertise in navigating complex regulatory frameworks, which reinforces its operational resilience and compliance. Given the continuity of management at Fat Panda, combined with the leadership and financial strength of CEA Industries, the Company believes Fat Panda is well positioned for continued success and further growth and profitability.” CEA Industries plans to leverage its balance sheet and the market position of Fat Panda to support the strategic expansion of Fat Panda’s retail and wholesale operations. This includes acquiring additional store locations and launching de novo stores, allowing the Company to reach untapped markets and improve accessibility for its customers. Further, CEA Industries intends to scale Fat Panda’s manufacturing operations, which produce house-brand and white-label vape products for other retailers. The Company believes these strategic initiatives will enable it to build on Fat Panda’s solid foundation, accelerate growth, and enhance profitability and operational excellence. The acquisition will continue the employment of the current management and of the production and retail staff, for the uninterrupted, continuous operations of the business. Certain of the senior management persons will enter into employment agreements for their continued employment after the closing of the acquisition. The Company expects to complete the acquisition in the first half of 2025.