Canadian premium natural food group GreenSpace Brands has signed a deal to acquire 100% of organic children's food firm Love Child (Brands) Inc.

"This is a strategic and synergistic acquisition with a shared focus on creating innovative, high quality natural products for children. GreenSpace has been growing at an average of 159% year-on-year since January 2015, and adding a larger business like Love Child, with their rapid growth rate in a complimentary product category, puts us in a great position for continued significant growth," said Matthew von Teichman, president and CEO of GreenSpace Brands.

"We are also excited to welcome Love Child's talented team, who has done a remarkable job building their diverse product offering and brand. There is a great opportunity to expand the brand within North America utilising our shared resources and expertise."

Last financial year, Love Child net revenue totaled C$5m, an increase of 213% year-on-year. Love Child founder Leah Garrad-Cole said that the brand's growth would benefit from operating within GreenSpace as it would broaden the group's retail and development capabilities.

Under the terms of the share purchase agreement, GreenSpace will pay $3m in cash for Love Child as well as issuing 1,190,476 common shares in GreenSpace. The share purchase agreement also contemplates the issuance of warrants on closing that will be exercisable if the Love Child brand achieves certain revenue thresholds, the company revealed. The share purchase agreement further contemplates that if the Love Child brand achieves certain revenue thresholds two years following closing, an earn-out of GreenSpace shares will be awarded.

Love Child has total assets of approximately $2.5m and total liabilities of approximately $2.1m, which is inclusive of $1.8m of debt that will be assumed by GreenSpace as part of the acquisition.

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By GlobalData

The acquisition is subject to a number of conditions, including receipt of Toronto stock exchange Venture Exchange approval.