Australian cannabusiness Creso Pharma (ASX:CPH) has inked an agreement with Canadian cannabis company PharmaCielo Limited (TSXV:PCLO) recommending the former be acquired by the latter.
Announced on Friday, Creso says the acquisition would result in a vertically integrated supply chain as PharmaCielo is engaged in cannabis cultivation, production and extraction.
Creso develops products in five key categories: therapeutics, nutraceuticals, animal health, lifestyle and topicals. Among its animal health products is Anibidiol, based on CBD.
Through its subsidiary Mernova Medical, the company already has hemp cultivation operations in Nova Scotia. Mernova Medical harvested the first crop from the facility last month. Creso says the facility should be operating at full capacity by the end of this month and cannabis cultivated at the facility will be used to service Canada’s marketplace.
PharmaCielo is a TSXV listed cannabis company and says it is the largest, fully licensed producer of medicinal cannabis oil products in Colombia. The acquisition would see Creso Pharma shareholders receive 0.0775 PharmaCielo shares for every Creso Pharma share and option holders receiving 0.0185 PharmaCielo shares per Creso option.
“Implementation of the proposed acquisition will combine two complementary cannabis companies to create a well-capitalised, publicly traded company with a strong growth profile and significant strategic advantages,” says Creso.
Creso Pharma’s active commercial network and sales presence will be significantly boosted, providing access to markets in South America, Mexico and Italy. PharmaCielo will hold dual-market licensed cultivation and processing facilities, plus expand its on-shelf product portfolio.
The acquisition going ahead is subject to customary conditions for a transaction of this nature.
“The Creso Pharma board of directors unanimously recommends that Creso Pharma securityholders vote in favour of the Schemes in the absence of a superior proposal and subject to an Independent Expert opining that the Schemes are in the best interests of Creso Pharma securityholders,” says the company.
Canadian cannabusinesses have demonstrated a lot of interest in Australian counterparts or establishing their own operations in the country. For example, Cronos Group Inc. launched Cronos Australia Pty Ltd. in February last year.