Sistema founder Brendan Lindsay joins forces with Baker, Sinclair, in Me Today

Sistema Founder Brendan Lindsay. Photo / NZ Herald.

CSM, a cashed-up listed shell part-owned by Sistema founder Brendan Lindsay, said it had reached an agreement to buy The Good Brand Co, a marketing company, and Me Today, which is backed by Grant Baker and Stephen Sinclair of 42 Below fame.

Both companies operate in the health and wellness sector.

The transaction values both the Me Today and Good Brand Company businesses at $5.55 million, including $1m of cash. CSM is valued at $2.1m.

CSM was placed in an NZX trading halt today. The NZX said it would stay in a trading halt pending an announcement from the exhange, or until the market opens on Friday.

The shares last traded at 2.3c each.

Me Today was founded by Baker and Sinclair, and Michael Kerr.

Kerr was responsible for establishing the Swisse brand in NZ and, more recently, was the general manager of the skincare brand Trilogy.

"Grant, Stephen and Michael joined forces to create Me Today as they believe there to be significant opportunity for a new brand in the wellness space," CSM said in a statement.

"The capital available in CSM Group, post completion, will help accelerate growth of existing products in New Zealand and other offshore markets as well as to provide capital to invest into new, unique product development," CSM said.

In addition to Me Today, the founders created The Good Brand Co to launch, sell and market additional brands.

CSM will pay for The Good Brand Company and Me Today through the issue of 1.11 billion shares at $0.005 per share.

It would then undertake a placement of up to $500,000 at $0.005c per share to wholesale investors.

Separately, CSM plans a one-for-two renounceable rights issue at 0.005c.

CSM expects to raise $1.0-$1.5m from the placement and the rights issue.

After the transaction, the Me Today founders will own about 60.8 per cent of the ordinary shares in CSM.

The founders' shares will be placed in escrow for a period of 12 months from the settlement date.

Subject to approvals, the deal is expected to be completed by April 1, 2020, at which point CSM will change its name to Me Today.

On completion, CSM is expected to have about $4m in cash, which would be used to fund further growth of the Me Today brand.

The board of the company, post completion, will consist of the three Me Today founders with Grant Baker as the chair.

Existing chair, Roger Gower, will remain as an independent director.

CSM holds its annual meeting in Auckland today.

Sean Joyce was re-elected to the CSM board and Tim Preston was elected.

Joyce and Preston are principals of CM Partners, a corporate advisory firm that specialises in small- to medium-sized New Zealand businesses.

Lindsay, who sold Sistema for $660m in 2016, last month paid $250,000 for a 12 per cent stake in CSM Group.

CSM was listed on the now-defunct junior board, the NZAX, before moving to the exchange's main board in July.

In its last annual report for the year to June, CSM - a former scrap metal company - announced a $1.3m loss.

Lindsay's stake was bought through his investment vehicle - Lindsay Investment Trust - the same entity that took a 19.9 per cent stake in tap maker Methven before it was taken over by Australia-based GWA for $118m last year.

The seller of the CSM stake was Fengli Group (Hongkong) Co, which has had its holding on the market for some time.

Lindsay's other investments have included Cambridge Stud, which he bought in late 2017.

Vodka company 42 Below, which started in a Wellington garage, was sold to liquor giant Bacardi for $138m in 2006.