US-based beverage company Long Blockchain has agreed to divest its subsidiary, Long Island Brand Beverages (LIBB), to ECC Ventures 2 (ECC2).

Under the terms of the deal, ECC2 will acquire 100% of the wholly-owned beverage subsidiary LIBB. It will pay cash consideration of C$500,000 ($376,815), as well as 3,666,667 newly issued shares.

Long Blockchain CEO Andy Shape said: “This transaction is a significant milestone for the Company and following its close later this year, it will allow us to concentrate our efforts on our underlying loyalty operating business.

“Our loyalty platform has experienced strong growth over the past year with new and existing customers and we look forward to building on that progress through our partnership with Stran Promotional Solutions.”

Currently, LIBB is engaged in the production of non-alcoholic beverages in the ready-to-drink (RTD) segment. The products are across the market under The Original Long Island Brand Iced Tea flagship brand.

As part of the deal, ECC2 has appointed Canaccord Genuity for a brokered private placement of subscription receipts for C$2m ($1.5m) in gross proceeds.

The company notes that the private placement proceeds will be held in escrow until all applicable regulatory approvals and conditions for the LIBB sale are satisfied.

Completion of the deal is expected to take place in the fourth quarter of the year.

In February last year, Long Blockchain unveiled its plan spin-off its beverage business, which was approved by Long Blockchain’s Board of Directors.