The cooperation between Jamieson Wellness Inc. and DCP Capital ("DCP"), a renowned worldwide private equity firm with a long history of accomplishment in Greater China and other Asian markets, was announced. DCP will invest in Jamieson Wellness' preferred shares and buy a minority stake in the company's Chinese operations. Together with these investments, DCP will obtain warrants to buy a predetermined number of the Company's common shares.
Jamieson will be able to provide more premium, high-quality vitamins, minerals, and supplements to a broader variety of Chinese consumers with the aid of DCP. The business of Jamieson is growing significantly in China. The company will combine DCP's in-depth local experience, impressive track record of building top consumer businesses, and established operational capabilities with Jamieson's premium product portfolio, high-quality production, and R&D expertise to enhance the company's steady organic expansion in China.
“This partnership with DCP is a significant next step for Jamieson in the world’s second largest VMS market,” said Mike Pilato, President and CEO of Jamieson Wellness. “In November, we announced the pending acquisition of the assets of our Chinese distributor and the expansion of our on the ground resources in China. The DCP team has 30 years of successful investment experience in China and has partnered with many industry leaders in the consumer sector. DCP's deep experience in China perfectly complements our capabilities and will pave the way to strengthen and accelerate our market opportunities as we move to control the value chain and scale our business in this important and fast-growing market.”
DCP will invest about $47.4 million ($35 million in USD) as part of the proposed partnership arrangement in exchange for a 33.3% stake in the ownership of the Company's Chinese businesses. A board of Directors appointed by the Company and DCP in accordance with their respective ownership interests will govern the partnership.
DCP will buy preferred shares in Jamieson Wellness for about $101.6 million ($75 million in USD) in order to support Jamieson's worldwide health and wellness plan. DCP may demand that the Company redeem the Preferred Shares between the second and fifth anniversaries of the Preferred Shares' acquisition. Along with the partnership deal and the preferred share investment, DCP will purchase warrants to buy 2,527,121 common shares of the company at an exercise price equal to a 10% premium over the 20-day volume-weighted average share price on February 22, 2023, subject to change in accordance with the rules of the Toronto Stock Exchange ("TSX"). Between the second and fifth anniversaries of the issue date, the warrants may be exercised.
“We are very excited to partner with Jamieson Wellness, one of the most respected VMS companies in the world and owners of Canada’s number one consumer health brand,” said Hwan Chung, Managing Director of DCP Capital. “The Company’s rich 100 plus year history, superior product quality and exceptional reputation has made the Jamieson brand much sought-after in the Chinese market. Working together with the Jamieson team, we are confident that our local expertise and operational capabilities will help accelerate the development of Jamieson in China and bring more high-quality health products to an expanded consumer base.”
The previously reported purchase of specific assets from Jamieson's Chinese distribution partner must close, along with other normal closing conditions, including any necessary regulatory approval. The partnership transaction must close before the preferred share and warrant investment may be closed, along with other usual closing requirements including getting TSX approval. In the second quarter of 2023, both transactions are anticipated to close simultaneously.