Innovation Beverage enters LOI for potential merger with BlockFuel

Innovation Beverage (IBG) Group has entered into a non-binding letter of intent for a merger transaction with BlockFuel Energy. The letter of intent outlines IBG’s acquisition of BlockFuel through a transaction structured as a reverse triangular merger, with a newly formed subsidiary of IBG merging with and into BFE, with BFE as the surviving entity, but with the owners of BFE receiving a number of IBG common stock equal to 90% of the total number of issued and outstanding shares of IBG common stock on a post-transaction basis. Upon closing of the contemplated transaction, it is expected that Daniel Joseph Lanskey, currently President and CEO of BlockFuel and a Director of IBG, would be appointed Chairman of the Board and CEO of IBG, and Sahil Beri, currently Chairman of the Board and CEO of IBG, be appointed as President of a newly formed Australian beverage subsidiary. Sahil Beri would also continue to serve on the board of IBG for a period of 6 months after closing of the contemplated transaction. Based on the independent fairness analysis and report conducted by Marshall & Stevens Transaction Advisory Services, the post-transaction combined company resulting from the merger of IBG and BFE is expected to have an equity valuation range of approximately $220M to $343M. As shareholders of IBG will own 10% of the combined entity upon closing, this equates to an implied post-transaction equity value for IBG in the range of $22M to $34.3M, compared to a pre-transaction valuation of $2.9M to $6.3M. BFE has signed an exclusive Letter of Engagement with Needham & Company to act as its investment banking partner. The letter of intent is non-binding and the parties intend to enter into good faith negotiations towards a definitive agreement governing the transaction, subject to due diligence review. The letter of intent contemplates that the merger closing would be subject to certain closing conditions, including the completion of a separate financing prior to or contemporaneous with the merger, the approval of the stockholders of BFE and IBG, any regulatory approvals that may be required, including any required approval by Nasdaq for the listing of BFE common stock to be issued. However, these terms are not binding, and any definitive agreement that may be reached is expected to contain other customary and negotiated terms and conditions and may contain terms and conditions different from those contemplated in the letter of intent.