Branded Group, a New York-based acquirer of digitally native brands, is being sued by Austin Naturals, a company it purchased in 2021, whose principals allege they are due $1.25 million as part of the agreement struck between the parties.
According to the complaint, Austin Naturals, also known as Puracy, was a successful seller of ethically sourced household and personal care items based in Austin. The company listed its products on marketplaces including Amazon, Kroger and Target, as well as its own direct-to-consumer sales.
After the Puracy team was approached in 2021 by Branded Group, the parties agreed to terms and a deal was closed on June 30, 2021.
Austin Natural said in its filing the acquisition agreement called for a closing payment, a deferred payment of $1.25 million and an earnout. Figures and information on the closing payment and earnout were not given.
The deferred payment was contingent on Austin Naturals realizing 90% of its trailing 12-month EBITDA in the year following the closing of the acquisition.
“That happened. The business thrived,” Austin Naturals said in its filing. When demand for payment was denied, the lawsuit alleges, Branded Group refused, putting them in breach of their agreement.
Austin Naturals is seeking a declaratory judgement in the amount of the deferred payment of $1.25 million, plus court costs. The lawsuit was filed Jan. 30 in U.S. District Court for the Western District of Texas in Austin.
In addition to Puracy, still listed on Branded Group’s website, other acquired companies include beard oil seller Viking Revolution, skincare brand Un Air d’Antan/Leaflife, kitchen gadget maker Ototo and Blom, a seller of women’s headwear from Bali. Last month, Branded acquired Fresh Heritage, a community-based men’s personal care company with products sourced from North Africa.
Branded’s co-founders are COO Alexis Lanternier, a former Amazon head buyer, EVP of ecommerce for Walmart Canada and CEO of Alibaba unit Lazada Singapore Group, and president Michael Ronen, a veteran of Softbank and Goldman Sachs. The company was launched in late 2020.
In September, Amazon brand rollup SellerX was sued by Regal Games over breach of contract related to the former’s acquisition of a popular line of children’s sidewalk chalk. Regal claimed SellerX failed to adequately promote Chalk City, causing sales to plummet along with the earnout potential.