Vegalab Inc (OTCMKTS: VEGL) is having a relatively rough start to the trading session this morning. However, the declines come after massive gains that we saw in the value of the stock yesterday as the company announced news surrounding the finalization of an acquisition. So, is now a good time to get involved? Today, we’ll talk about the news that was released yesterday, what we’re seeing from the stock, and what we’ll be watching for with regard to VEGL ahead.
VEGL Announces The Completion Of An Acquisition
As mentioned above, Vegalab had an incredibly strong day in the market yesterday after announcing that it has completed the acquisition of The Agronomy Group, LLC. The acquisition became effective on February 1, 2018. Located in California, The Agronomy Group is a producer and distributor of environmentally friendly agrochemicals. The company has also been the top U.S. sales organization for VEGL.
The acquisition was completed through the delivery of 600,000 shares of restricted shares of VEGL. The company was also provided a warrant to purchase 1,600,000 shares of restricted common stock of Vegalab at an exercise price of $1.20 per share that is exercisable over the course of five years.
The news of the acquisition is overwhelmingly positive. After all, through the acquisition, the company is dramatically expanding its internal marketing capabilities. In a statement, David Selakovic, CEO at VEGL, had the following to offer:
Vegalab’s acquisition of The Agronomy Group puts us in direct relationship with industry leading, national agro-chemical distributors and dealers such as Winfield United, Stanislaus Farm Supply, Buttonwillow Warehouse, and Mid Valley Agricultural Services. We are excited about the potential to increase our sales with the addition of 29 new products from TAG, including 10 of which are listed for use in organic agriculture (9 by the Organic Materials Review Institute, and 1 by the Washington State Department of Agriculture). Our management team determined this to be a highly strategic acquisition opportunity, and we expect TAG’s environmentally friendly products and established distribution channels to substantially increase our revenues and profitability.
What We’re Seeing From the Stock
As investors, one of the first lessons that we learn is that the news moves the market. In this particular case, the news proved to be overwhelmingly positive. After all, this is a highly valuable acquisition. So, it’s no surprise to see that the stock went on a dramatic run for the top yesterday. However, the stock seems to be correcting today. Our partners at Trade Ideas were the first to alert us to the declines. Currently (10:17), VEGL is trading at $4.00 per share after a loss of $0.25 per share or 5.88% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on VEGL. In particular, we’re interested in following the story surrounding the company’s ongoing growth in the agro-chemicals space. While the stock is down, the correction from yesterday’s gains could prove to be a discounted opportunity to get in on future growth. Also, tomorrow morning, Kenny Soulstring, Chief Strategic Analyst here at CNA Finance, will be releasing his full report on the company. So, stay tuned. Nonetheless, we’ll continue to follow the story and bring the news to you as it breaks.
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