Safe and Green Development Corporation Releases Shareholder Letter Regarding Decision to Acquire Resource Group
Rhea-AI Summary
Safe and Green Development (NASDAQ: SGD) has announced its decision to acquire 100% of Resource Group US Holdings , a company with exclusive technology in the composting and engineered soils industry. The acquisition represents a strategic shift in SGD's business model, combining their real estate development expertise with Resource Group's technology.
Resource Group has shown significant growth, with revenues increasing from $16 million in 2023 to $19.1 million in 2024 (unaudited). SGD anticipates pro forma revenues of approximately $25 million in 2025. The deal structure includes issuing restricted common stock through a convertible note, which together with additional share issuance will equal 49% of SGD's outstanding shares at closing.
The acquisition target's vertical integration, logistics business ownership, and scalable business model position it to address a $3.2 billion market in Florida. The transaction completion is subject to customary closing conditions and Resource Group's audit completion.
Positive
- Revenue growth from $16M (2023) to $19.1M (2024) with projected $25M in 2025
- Access to $3.2B market opportunity in Florida
- Acquisition includes valuable exclusive technology license
- Vertical integration with logistics business ownership
- Scalable and replicable business model
Negative
- Significant shareholder dilution with 49% stake going to Resource Group owners
- Dependency on audit completion and closing conditions
- Major shift away from core real estate development business
- Unaudited financial figures for historical performance
News Market Reaction – SGD
In the trading session that priced this news, SGD gained 19.83%, reflecting a significant positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
AI-generated analysis. How Rhea-AI works. Not financial advice.
"Dear Shareholders,
We wanted to provide you with insight into our decision to move forward with the acquisition of Resource Group US Holdings LLC and the strategic reasoning behind this pivotal move. Resource Group, as you may already be aware, is a company that holds an exclusive license to a cutting-edge technology, which grants it a significant competitive advantage in the composting and engineered soils industry. The closing of this transaction is only contingent on customary closing conditions and completion of Resource Group's audit.
Our decision to acquire Resource Group represents a calculated shift in our business model, as we intend to leverage our expertise in real estate development by utilizing Resource Group's technology to redevelop forthcoming land opportunities. However, going forward, the primary focus of our company will be on Resource Group's core business, capitalizing on the opportunities it presents for our growth initiatives.
One of the key factors that made Resource Group an attractive acquisition target is its vertical integration and ownership of a logistics business. This opens up additional avenues for growth through mergers and acquisitions as well as our current soils industry opportunities expanding our market presence and enhancing our competitive edge.
Resource Group's remarkable performance in recent years is another compelling factor that influenced our decision. They have demonstrated substantial growth, increasing their revenues from
Moreover, the scalability and replicability of Resource Group's business model offer an exciting opportunity for rapid expansion in multiple markets and industry sectors. As we set our sights on addressing a sizable
We firmly believe that this acquisition will create tremendous value for our shareholders. It is unfortunate that the market has not fully recognized the transformative potential and effect this deal will have on our company and the value it will generate for our esteemed shareholders.
In conclusion, we are confident that the acquisition of Resource Group aligns perfectly with our long-term strategic goals and our commitment to our protecting our shareholders interest. By leveraging their exclusive technology and capitalizing on their core business, we anticipate the creation of sustainable value for SGD and its shareholders. We remain committed to executing this acquisition seamlessly and delivering strong financial performance in the years to come.
Thank you for your continued support."
In connection with the proposed transaction between the Company and Resource Group and the members of Resource Group, the Company intends to file with the SEC a proxy statement for its stockholders to vote on the approval of the issuance shares of the Company's restricted common stock under a convertible note to be issued to the members of Resource Group at closing, which together with the issuance of shares of the Company's restricted common stock equal to
Participants in the Solicitation
The Company, Resource Group and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of the Company is set forth in the Company's proxy statement for its 2024 annual meeting of shareholders, which was filed with the SEC on May 31, 2024, and the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on April 1, 2024. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC regarding the proposed transaction when such materials become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from the Company using the source indicated above.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. No offer of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Forward-Looking Statements
This communication may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. All statements other than statements of historical fact are or may be deemed to be forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates" and similar expressions and include statements regarding acquiring the equity interests in Resource Group, anticipating pro forma revenues of approximately
Barwicki Investor Relations
Andrew@Barwicki.com
516-662-9461
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SOURCE Safe and Green Development Corporation