Happy Belly Food Group (CSE: HBFG) is set to acquire another emerging food brand. The firm this morning announced that it has entered into a letter of intent to acquire a 50% stake in Ontario-based Salus Fresh Foods and Salus Fresh Foods Franchising.

Salus currently has nine established street-front and food court locations in Ontario, which focuses on serving fresh bowls, sandwiches, wraps, and soups among other offerings. The operation is said to currently be debt free and cashflow positive, although specifics were not provided.

The transaction will see Happy Belly pay $300,000 in the form of shares for a 50% stake in the operation, which is said to represent a purchase price of 4x EBITDA. Happy Belly also has an option to acquire the remaining 50% ownership stake in the company at its election.

Upon closing, the transaction will result in Salus being the eighth restaurant brand in Happy Belly’s portfolio, and the tenth brand overall. Totally operating restaurants, which includes both corporate-owned and franchised operations, will sit at 38, while the company has a further 376 locations in its development pipeline.

“This accretive acquisition checks a lot of boxes for Happy Belly, and enhances our ability to scale and integrate future healthy, clean food brands into our framework as we focus on scaling operations in 2024. SALUS Fresh Foods is experiencing a positive +19% increase in same store sales YOY, and we anticipate further sales benefits as employees return to work in central business districts,” commented Sean Black, Chief Investment Officer of Happy Belly, on the transaction.

Happy Belly Food Group last traded at $0.52 on the CSE.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.