8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  November 15, 2017

Merit Medical Systems, Inc.

(Exact name of registrant as specified in its charter)

Utah	0-18592	87-0447695
(State or other jurisdiction of	(Commission	(I.R.S. Employer
incorporation or organization)	File Number)	Identification No.)

1600 West Merit Parkway
South Jordan, Utah	84095
(Address of principal executive offices)	(Zip Code)

(801) 253-1600

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 1.01 Entry into a Material Definitive Agreement.

On November 15, 2017, Merit Medical Systems, Inc., a Utah corporation (“Merit”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Becton, Dickinson and Company, a New Jersey corporation (“BD”), pursuant to which Merit proposes to acquire various assets relating to (i) a tunneled home drainage catheter product line currently owned by C.R. Bard, Inc., a New Jersey corporation (“Bard”), and (ii) a soft tissue core needle biopsy product line currently owned by BD (collectively, the “Acquisition”).  Merit proposes to acquire these assets in connection with the proposed merger between BD and Bard.

Completion of the proposed Acquisition is subject to customary closing conditions, including, among others, (i) the closing of the proposed merger between BD and Bard, (ii) obtaining antitrust approvals in the United States and certain other jurisdictions, (iii) subject to certain exceptions, the accuracy of the representations and warranties of the other party and (iv) material compliance by the other party with its obligations under the Purchase Agreement.

The Purchase Agreement contains customary representations and warranties that survive the closing of the Acquisition for eighteen (18) months, with certain exceptions, as well as customary indemnification provisions and covenants, including covenants relating to the conduct of business between the execution of the Purchase Agreement and the closing of the proposed Acquisition.  The Purchase Agreement also contains certain termination rights for both Merit and BD, and provides that, in connection with a termination of the Purchase Agreement under specified circumstances, BD will reimburse certain transaction expenses of Merit up to $2,000,000.

At the closing of the Acquisition, Merit and BD intend to enter into various agreements to facilitate the transition of the acquired assets to Merit, including a Transition Services Agreement, Contract Manufacturing Agreement, Distribution Agreement and Patent and Know-How License Agreement.

The purchase price for assets acquired pursuant to the Purchase Agreement is $100 million, subject to adjustment for fluctuations in the value of transferred inventory. Merit intends to finance the purchase price at closing through borrowings which are currently available under its long-term credit facility.

The foregoing summary of the principal terms of the Purchase Agreement is not complete and is qualified in its entirety by the actual terms and conditions of the Purchase Agreement, a copy of which Merit intends to file in a future filing with the U.S. Securities & Exchange Commission (the “Commission”). The representations, warranties, and other terms contained in the Purchase Agreement were made solely for the purposes of such agreement and as of specified dates, were solely for the benefit of the parties to the Purchase Agreement, and may be subject to limitations agreed upon by the contracting parties. Those representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Merit, BD, Bard or any of their respective subsidiaries or affiliates. Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts, since (i) they were made only as of the date of the Purchase Agreement or prior, specified dates, (ii) in some cases they are subject to qualifications with respect to materiality, knowledge and/or other matters, and (iii) they may be modified in important part by the underlying exhibits and schedules.

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Safe Harbor for Forward-Looking Statements

This Current Report contains statements which are not purely historical, including, without limitation, statements regarding Merit’s forecasted plans, revenues, gross margin, operating margin, cash flow net income, financial results, facility utilization, sales efficiencies or expectations of closing the proposed Acquisition.  Such statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties such as those described in Merit’s Annual Report on Form 10-K for the year ended December 31, 2016 and subsequent filings with the Securities and Exchange Commission. Such risks and uncertainties include the following: the dependence of the proposed acquisition on the closing of the proposed merger between BD and Bard, and regulatory and other conditions to closing associated with that transaction; the possibility that conditions to the closing of the proposed transaction will not be satisfied; Merit’s potential inability to successfully manage the proposed acquisition and achieve anticipated financial results, facilities utilization and other anticipated benefits; uncertainties as to whether Merit will achieve sales, gross margin, cash flow and profitability results from the acquired assets which are comparable to the experience of BD and Bard; unknown costs and risks associated with the assets proposed to be acquired; governmental scrutiny and regulation of the medical device industry, including governmental inquiries, investigations and proceedings involving Merit or the assets proposed to be acquired; how the occurrence of any unanticipated event or cost in connection with the proposed transaction may affect Merit’s projected ability to comply with debt covenants; infringement of acquired technology or the assertion that acquired technology infringes the rights of other parties; the potential of fines, penalties or other adverse consequences if Merit’s employees or agents violate the U.S. Foreign Corrupt Practices Act or other laws or regulations; laws and regulations targeting fraud and abuse in the healthcare industry; potential for significant adverse changes in governing regulations; changes in tax laws and regulations in the United States or other countries; increases in the prices of commodity components; negative changes in economic and industry conditions in the United States or other countries; termination or interruption of relationships with Merit’s suppliers, or failure of such suppliers to perform, in each case including acquired supplier relationships; the effects of fluctuations in exchange rates on projected financial results; development of new products and technology that could render Merit’s existing or acquired products obsolete; changes in healthcare policies or markets related to healthcare reform initiatives; failure to comply with applicable environmental laws; changes in key personnel; work stoppage or transportation risks; price and product competition; availability of labor and materials; fluctuations in and obsolescence of inventory; and other factors referred to in Merit’s Annual Report on Form 10-K for the year ended December 31, 2016 and other materials filed with the Securities and Exchange Commission. All subsequent forward-looking statements attributable to Merit or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and Merit assumes no obligation to update or disclose revisions to those estimates.

Item 7.01 Regulation FD Disclosure

On November 16, 2017, Merit issued a press release, entitled “MERIT MEDICAL SIGNS PURCHASE AGREEMENT WITH BD FOR DIVESTMENT ASSETS” related to the Purchase Agreement and the potential Acquisition, a copy of which is filed as Exhibit 99.1 to this Current Report.

Additionally, Merit intends for its management to use the materials attached to this Current Report as Exhibit 99.2 (the “Presentation Materials”) in connection with a conference call, meetings and other communications with shareholders and members of the financial and investment community with respect to the potential Acquisition. Information about a scheduled conference call, including date, time and access information, is included in the press release filed as Exhibit 99.1 to this Current Report.

The information set forth in the Presentation Materials is summary information that is intended to be considered in the context of Merit’s filings with the Commission and other public announcements that Merit may make, from time to time, by press release or otherwise.  Merit undertakes no duty or obligation to publicly update the information contained in the Presentation Materials, although it may do so from time to time as it determines is necessary.  Any updates may be made through the filing of other reports with the Commission, through press releases, or by other public disclosures.  Actual results will likely differ, and may differ materially, from anticipated results.  Financial estimates and projections are subject to change and are not intended to be relied upon as predictions of future operating or financial results or financial position, and Merit assumes no obligation to update or disclose revisions to those estimates or projections.  The information set forth in this Item 7.01 and in Exhibits 99.1 and 99.2 attached hereto is qualified in all respects by, and is subject in all respects to, the statements set forth in the “Safe Harbor for Forward-Looking Statements” section set forth above.

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The information contained in this Item 7.01 and in the attached Exhibits 99.1 and 99.2 is being furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is not deemed incorporated by reference by any general statements incorporating by reference this Current Report or future filings into any filings under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Merit specifically incorporates the information by reference.  By filing this Current Report and furnishing this information, Merit makes no admission or statement as to the materiality of any information in this Current Report that is required to be disclosed solely by reason of Regulation FD.

Item 9.01Financial Statements and Exhibits.

(d)  Exhibits

99.1Press release issued by Merit Medical Systems, Inc., dated November 16, 2017, entitled “MERIT MEDICAL SIGNS PURCHASE AGREEMENT WITH BD FOR DIVESTMENT ASSETS”

99.2Management presentation of Merit Medical Systems, Inc., dated November 16, 2017 entitled “Merit Medical Signs Purchase Agreement with BD for Divestment Assets”

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EXHIBIT INDEX

EXHIBIT NUMBER	DESCRIPTION
99.1	Press release issued by Merit Medical Systems, Inc., dated November 16, 2017, entitled “MERIT MEDICAL SIGNS PURCHASE AGREEMENT WITH BD FOR DIVESTMENT ASSETS”
99.2	Management presentation of Merit Medical Systems, Inc., dated November 16, 2017 entitled “Merit Medical Signs Purchase Agreement with BD for Divestment Assets”

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MERIT MEDICAL SYSTEMS, INC.
Date:  November 16, 2017	By:	/s/ Brian G. Lloyd
		Chief Legal Officer and Corporate Secretary

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Date:	November 16, 2017
Contact:	Anne-Marie Wright, Vice President, Corporate Communications
Phone:	(801) 208-4167  e-mail: awright@merit.com  Fax: (801) 253-1688

MERIT MEDICAL SIGNS PURCHASE AGREEMENT

WITH BD FOR DIVESTMENT ASSETS

SOUTH JORDAN, UTAH— Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading manufacturer and marketer of proprietary disposable devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care and endoscopy, announced today that it has signed an asset purchase agreement with BD (Becton, Dickinson and Company) to acquire certain assets which BD proposes to sell in connection with its proposed acquisition of C.R. Bard, Inc. (Bard).  Merit’s proposed asset acquisition is subject to the closing of BD’s proposed acquisition of Bard as well as other usual and customary closing conditions.

The assets to be acquired are soft tissue core needle biopsy products currently sold by BD under the trade names of Achieve™ Programmable Automatic Biopsy System, Temno™ Biopsy System and Tru-Cut™ Biopsy Needles.  Merit understands these products are currently sold worldwide through a combination of a direct sales force and distribution partners.

Additionally, Merit proposes to acquire the Aspira® Pleural Effusion Drainage Kits and the Aspira® Peritoneal Drainage System currently marketed by Bard. Merit understands these products are currently sold primarily in the United States.

The purchase price for the product lines and related assets to be acquired is $100 million, subject to adjustment for fluctuations in the value of transferred inventory. Merit intends to finance the acquisition at closing through borrowings which are currently available under its revolving credit facility. After giving effect to the proposed transaction, Merit anticipates its debt to adjusted EBITDA (as calculated in accordance with the terms of Merit’s existing credit agreement) will increase from approximately 2.20 to approximately 2.70.

This transaction is expected to create value for Merit’s shareholders and to be accretive to both GAAP and non-GAAP earnings in 2018, including the anticipated impact of incremental interest expense associated with financing the transaction. Merit’s management expects the acquisition to provide incremental annual revenues in the range of $42-48 million, adjusted gross margins for the subject product lines in the range of 60—70%, and, over a period of six to twelve months, to be accretive by 50—120 basis points to Merit’s adjusted gross margins. The transaction is also expected to expand operating margins and increase cash flow. Merit’s management expects the acquisition to provide $0.10—$0.19 in adjusted non-GAAP earnings per share accretion ($0.01 to $0.08 in GAAP earnings per share accretion) in fiscal year 2018.

“We believe this is a perfect fit for Merit,” said Merit’s Chairman and Chief Executive Officer Fred P. Lampropoulos. “These products are well established with an installed base and complement Merit’s CorVocet™ Full Core Biopsy System and our recently-acquired bone biopsy products.”

“There are also a number of markets in which Merit has direct representation that will be expanded to include the acquired products, as well as new markets which we plan to develop,”

Lampropoulos said. “In summary, we believe this transaction will provide complementary high-margin products, increased use of our existing facilities, market expansion opportunities, accretive margins, profits and our existing sales force utilization.”

ADVISORS

Piper Jaffray acted as lead financial advisor to Merit in connection with the negotiation of the purchase agreement. Baker & McKenzie provided legal counsel.  Merit anticipates that financing for the transaction will be provided through the lenders under its existing long-term credit facility: Wells Fargo Bank, National Association, Bank of America, N.A., HSBC Bank USA, National Association and U.S. Bank National Association.

CONFERENCE CALL

Merit will hold a conference call (conference ID 9377629) today, November 16, at 11:00 a.m. Eastern (10:00 a.m. Central, 9:00 a.m. Mountain, and 8:00 a.m. Pacific). The domestic telephone number is (844) 578-9672 and the international number is (508) 637-5656. A live webcast and slide deck will also be available at merit.com.

ABOUT MERIT

Founded in 1987, Merit Medical Systems, Inc. is engaged in the development, manufacture and distribution of proprietary disposable medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology and endoscopy. Merit serves client hospitals worldwide with a domestic and international sales force totaling approximately 290 individuals. Merit employs approximately 4,700 people worldwide with facilities in South Jordan, Utah; Pearland, Texas; Richmond, Virginia; Malvern, Pennsylvania; Rockland, Massachusetts; San Jose, California; Maastricht and Venlo, The Netherlands; Paris, France; Galway, Ireland; Beijing, China; Tijuana, Mexico; Joinville, Brazil; Markham, Ontario, Canada; Melbourne, Australia; Tokyo, Japan; and Yishun, Singapore.

FORWARD-LOOKING STATEMENTS

Statements contained in this release which are not purely historical, including, without limitation, statements regarding Merit’s forecasted plans, revenues, gross margin, operating margin, cash flow net income, financial results, facility utilization, sales efficiencies or expectations of closing the proposed acquisition described in this release, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties such as those described in Merit’s Annual Report on Form 10-K for the year ended December 31, 2016 and subsequent filings with the Securities and Exchange Commission.  Such risks and uncertainties include the following: the dependence of the proposed acquisition on the closing of a separate transaction to which Merit is not a party, and regulatory and other conditions to closing associated with that transaction; the possibility that conditions to the closing of the proposed transaction will not be satisfied; Merit’s potential inability to successfully manage the proposed acquisition and achieve anticipated financial results, facilities utilization and other anticipated benefits; uncertainties as to whether Merit will achieve sales, gross margin, cash flow and profitability results from the acquired assets which are comparable to the experience of BD and Bard; unknown costs and risks associated with the assets proposed to be acquired; governmental scrutiny and regulation of the medical device industry, including governmental inquiries, investigations and proceedings involving Merit or the assets proposed to be acquired; how the occurrence of any unanticipated event or cost in connection with the proposed transaction may affect Merit’s projected ability to comply with debt covenants;

infringement of acquired technology or the assertion that acquired technology infringes the rights of other parties; the potential of fines, penalties or other adverse consequences if Merit’s employees or agents violate the U.S. Foreign Corrupt Practices Act or other laws or regulations; laws and regulations targeting fraud and abuse in the healthcare industry; potential for significant adverse changes in governing regulations; changes in tax laws and regulations in the United States or other countries; increases in the prices of commodity components; negative changes in economic and industry conditions in the United States or other countries; termination or interruption of relationships with Merit’s suppliers, or failure of such suppliers to perform, in each case including acquired supplier relationships; the effects of fluctuations in exchange rates on projected financial results; development of new products and technology that could render Merit’s existing or acquired products obsolete; changes in healthcare policies or markets related to healthcare reform initiatives; failure to comply with applicable environmental laws; changes in key personnel; work stoppage or transportation risks; price and product competition; availability of labor and materials; fluctuations in and obsolescence of inventory; and other factors referred to in Merit’s Annual Report on Form 10-K for the year ended December 31, 2016 and other materials filed with the Securities and Exchange Commission. All subsequent forward-looking statements attributable to Merit or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and Merit assumes no obligation to update or disclose revisions to those estimates.

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EX-99.2

Exhibit 99.2

Merit Medical Signs Purchase Agreement with BD for Divestment Assets

Disclosure Regarding Forward-Looking Statements This presentation and any accompanying management commentary include “forward-looking statements,” as defined within applicable securities laws and regulations. All statements in this presentation, other than statements of historical fact, are “forward-looking statements”, including projections of earnings, revenues, gross margins, operating margin, cash flow or other financial items, statements regarding our plans and objectives for future operations, facilities utilization, sales efficiencies, statements regarding expectations of closing the proposed transaction described in this presentation, statements concerning proposed products or services, statements regarding the integration, development or commercialization of our business or any business, assets or operations we have acquired or may acquire, statements regarding future economic conditions or performance, statements regarding governmental inquiries, investigations or proceedings and statements or assumptions underlying any of the foregoing. All forward-looking statements, including financial projections, included in this presentation are made as of the date of this presentation, and are based on information available to us as of such date. We assume no obligation to update or disclose revisions to any forward-looking statement, except as required by law or regulation. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “likely,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “projects,” ”forecast,” “potential,” “plan,” or other comparable terminology. Forward-looking statements are based on our current beliefs, expectations and assumptions regarding our business, domestic and global economies, regulatory and competitive environments and other conditions. There can be no assurance that such beliefs, expectations or assumptions or any of the forward-looking statements will prove to be correct. Actual results will likely differ, and may differ materially, from those projected or assumed in the forward-looking statements. Our future financial and operating results and condition, as well as any forward-looking statements, are subject to inherent risks and uncertainties such as those described in our Annual Report on Form 10-K for the year ended December 31, 2016 and other filings with the U.S. Securities and Exchange Commission. Such risks and uncertainties include the following risks: the dependence of the proposed acquisition on the closing of a separate transaction to which we are not a party, and regulatory and other conditions to closing associated with that transaction; the possibility that conditions to the closing of the proposed transaction will not be satisfied; our potential inability to successfully manage the proposed acquisition and achieve our anticipated operating and financial results, facilities utilization and other anticipated benefits; uncertainties as to whether we will achieve comparable sales, gross margin, cash flow and profitability results from the acquired assets as BD and Bard; unknown costs and risks associated with the acquired assets; growth through acquisitions, including the inability to commercialize technology acquired through completed, proposed or future transactions; product recalls and product liability claims; expenditures relating to research, development, testing and regulatory approval or clearance of our products and risks that such products may not be developed successfully or approved for commercial use; governmental scrutiny and regulation of the medical device industry, including governmental inquiries, investigations and proceedings involving our business or the assets we propose to acquire; how the occurrence of any unanticipated event or cost in connection with the proposed assets may affect our projected ability to comply with debt covenants; reforms to the 510(k) process administered by the U.S. Food and Drug Administration; restrictions on our liquidity or business operations resulting from our current debt agreements; infringement of acquired technology or the assertion that any acquired technology infringes the rights of other parties; the potential of fines, penalties or other adverse consequences if our employees or agents violate the U.S. Foreign Corrupt Practices Act or other laws or regulations; laws and regulations targeting fraud and abuse in the healthcare industry; potential for significant adverse changes in governing regulations; changes in tax laws and regulations in the United States or other countries; increases in the prices of commodity components; negative changes in economic and industry conditions in the United States or other countries; termination or interruption of relationships with our suppliers, or failure of such suppliers to perform, in each case including acquired supplier relationships; the effects of fluctuations in exchange rates on projected financial results; concentration of a substantial portion of our revenues among a few products and procedures; development of new products and technology that could render our existing or acquired products obsolete; market acceptance of new products; volatility in the market price of our common stock; modification or limitation of governmental or private insurance reimbursement policies; changes in healthcare policies or markets related to healthcare reform initiatives; failure to comply with applicable environmental laws; changes in key personnel; work stoppage or transportation risks; introduction of products in a timely fashion; price and product competition; availability of labor and materials; and fluctuations in and obsolescence of inventory. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The financial projections set forth in this presentation are based on a number of assumptions, estimates and forecasts. The inaccuracy of any one of those assumptions, estimates or forecasts could materially impact our financial results. Inevitably, some of those assumptions, estimates or forecasts will not occur, and unanticipated events and circumstances will occur subsequent to the date of this presentation. In addition to changes in the underlying assumptions, our future performance is subject to a number of risks and uncertainties with respect to our existing and proposed business, and other factors that may cause our actual results or performance to be materially different from any predicted or implied. Although we have attempted to identify important assumptions in the financial projections, there may be other factors that could materially affect our actual financial performance, and no assurance can be given that all material factors have been considered in the preparation of the financial projections. Accordingly, you should not place undue reliance on such projections. Future operating results are, in fact, impossible to predict.

Deal Highlights Biopsy Merit proposes to acquire the following assets: Achieve™ Biopsy Devices Temno™ Biopsy Devices Tru-Cut™ Biopsy Device Tru-Cut™

Deal Highlights Biopsy Complementary to Merit’s product offering and strategically fits into its current biopsy portfolio Merit CorVocet™ Biopsy Devices Merit Bone Biopsy Devices

Deal Highlights Home Drainage Merit proposes to acquire the following assets: Aspira® Pleural Effusion Drainage System Aspira® Peritoneal Drainage System Complementary to Merit’s product offering and strategically fits into its current drainage portfolio

Anticipated annual revenues of $42-$48 million Anticipated adjusted gross margins of 60-70% on acquired products Anticipated combined non-GAAP gross margin accretion of 50-120 basis points Anticipated non-GAAP EPS of $0.10-$0.19 and GAAP EPS of $0.01-$0.08 in adjusted accretion FY18 Purchase price of $100 million Financed out of existing credit facilities Projected Financial Highlights

Strategic Fit Within Merit’s PI Business Line

Global Capability – Global Expansion, Wholesale to Retail

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