TopGum Industries Ltd. (TASE: TPGM), a global leader in gummy-format dietary supplements, and PL Developments LLC, a U.S. OTC pharmaceuticals company, announced the completion of TopGum’s acquisition of PLD’s U.S. gummy manufacturing operations.

The transaction, first announced in January, deepens TopGum’s presence in the U.S., its largest target market, and positions the company in the emerging pharmaceutical gummies market.

Under a strategic commercial partnership, PLD will commercialize and distribute TopGum-manufactured products to U.S. retailers under store-brand labels.

The acquisition gives TopGum a U.S.-based manufacturing platform purpose-built to FDA pharmaceutical standards, capable of producing both pharmaceutical gummies and dietary supplements. This facility is among a select few globally to have reached operational manufacturing capability for pharmaceutical gummies.

“This is a strategic transaction that gives TopGum a unique foothold in the emerging pharmaceutical gummy market and reinforces its positioning as an innovative, leading company in its field,” said TopGum CEO Eyal Shohat. “The transaction positions TopGum as a unique player with an advanced global manufacturing platform, built to serve the largest dietary supplement brands in the U.S. with local manufacturing.”

Evan Singer, president, PL Developments, commented: “At PLD, we see gummies as an emerging platform for delivering healthcare across vitamins, minerals and supplements (VMS) and pharmaceutical products, which customers and consumers are increasingly asking for. This transaction gives us the ability to serve that demand at an even more aggressive speed and scale, by partnering with a world-class gummy manufacturing and development company.”

Transaction Terms

The consideration, funded by TopGum’s existing resources, comprises $10 million in cash at closing; 1,893,060 shares valued at approximately $8 million at closing (based on a price of NIS 13 per share); Up to 4,022,751 additional shares (valued at up to $ 17 million) as contingent consideration, payable upon achievement of agreed commercial and regulatory milestones.

On a fully diluted basis, assuming achievement of all milestones, PL Developments will become a major shareholder of TopGum, holding approximately 4% of the company’s equity.

TopGum has also agreed to act for the appointment of Asaph Naaman, CFO of PL Developments to its Board of Directors, subject to applicable law and required approvals.