Eshbal Functional Food’s proposed deal to buy US gluten-free business GF Nation has failed to materialise.
The Canada-listed business signed a letter of intent to acquire GF Nation in June but said in a statement yesterday the transaction “did not mature to a final agreement”.
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Eshbal said at the time it was “excited about the potential to integrate Gluten Free Nation’s product line and leverage its customer relationships to further expand Eshbal’s North American presence”.
The development was announced alongside the publication of Eshbal’s first consolidated financial results following the completion of a reverse takeover (RTO) with its Israeli operating subsidiary in April.
In the second quarter, Eshbal reported revenues of $2.97m, up from $2.55m at the same time last year.
Gross profit improved to $628,000 (21.2% of revenues), compared to $478,000 (18.7% of revenues), reflecting both higher absolute profit and stronger margins, Eshbal said.
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By GlobalDataFor the six-month period ending 30 June, revenues totalled $6.72m, up 12% on the first half of 2024.
Gross profit increased 25% to $1.73m. Operating income was $204,000, which remained positive despite “new public company costs introduced following the RTO”, according to Eshbal.
The company’s bottom line was “significantly impacted” by a non-recurring $1.69m non-cash listing expense directly associated with the reverse takeover.
As a result, Eshbal reported a second-quarter net loss of $2m and one of $1.6m for the opening six months of the year.
In July, Eshbal also signed a letter of intent to buy a majority stake in US low-carb and gluten-free business Dare to Be Different Foods (D2BD).
Speaking to Just Food earlier this month, the company said it was banking on acquisitions in North America to drive growth and triple revenue in the next two years.
More acquisitions are likely on the cards to foster Eshbal’s growth in North America, CEO Tomer Bar Meir told Just Food. However, there are no plans to enter other regions or markets right now with the focus on North America through local manufacturing and domestic production in Israel.
“Once we can complete any of the M&As they will immediately give us local revenues. It’s not only the acquired revenues from the company purchased but we will also be able to add the products that we want from Israel through these companies into the market,” he said.
“That’s what we hope to do. Regardless of what M&A will close, and how fast, I can promise you, we’ll have more LOIs in the future, hopefully the near future.”
