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FitLife Brands Inc (NASDAQ:FTLF) said the U.S. Bankruptcy Court for the District of Nevada has approved its acquisition of substantially all of the assets of MusclePharm Corporation.
Sports nutrition brand MusclePharm has been generating approximately $1.2-1.5 million in monthly revenue at gross margins between 25-30% during bankruptcy.
The company plans to fund the cash purchase price of $18.5 million using cash on hand and the proceeds of a new committed $10 million term loan. The deal is expected to be highly accretive to existing shareholders once all transaction-related costs (anticipated to be approximately $500,000) have been expensed.
FitLife intends to return the brand to growth and enhance profitability through a focus on online sales direct to the end consumer and expanded wholesale distribution.
Prior to bankruptcy, MusclePharm's products enjoyed strong distribution with major domestic retailers, FitLife noted.
FitLife intends to work with MusclePharm's previous retail partners to restore distribution in the domestic wholesale channel.
"We expect MusclePharm to drive continued revenue and earnings growth for our Company. Although we will always opportunistically evaluate potential additional M&A transactions, after closing the MusclePharm transaction we expect to focus primarily on integrating and growing our recently acquired brands and reducing leverage through EBITDA growth and debt reduction," said FitLife Chairman and CEO Dayton Judd.
The transaction is expected to close no later than October 16, 2023.
FitLife ended the second quarter with $11.9 million outstanding on its term loan and cash of $9.8 million.
Price Action: FTLF shares closed higher by 13.1% at $17.29 on Wednesday.
Posted In: FTLF
