Canadian listed company PharmaCielo has launched a takeover bid for Creso Pharma (ASX: CPH), which Creso's board endorses and values the company at A$122 million.
TSXV-listed PharmaCielo has a current market cap of C$675 million (A$724 million) and owns Colombia's largest cannabis producer which is fully licenced to manufacture medicinal cannabis oil.
The strategy for the merger is to create a vertically integrated supply chain, with expanded medicinal cannabis product offerings and numerous distribution channels in global markets.
Additionally, the merged entity will hold licenced cultivation and processing facilities in both Colombia and Canada.
"PharmaCielo's proposed acquisition of Creso harnesses the synergies between us and creates a combined company poised to become a global powerhouse in the medicinal cannabis industry."
– PharmaCielo chief executive officer David Attard said.
"Upon closing of the transaction, the combined company will quadruple our global footprint with presence in more than a dozen countries spanning North and Latin America, Switzerland, Europe, the Middle East, Australian and New Zealand."
PharmaCielo proposes to acquire Creso through share and option schemes, which effectively values Creso at A$122 million or A$0.63 per share – representing a 50% premium to Creso's closing share price yesterday of A$0.42.
Under the share scheme, Creso's shareholders will receive 0.0775 PharmaCielo shares for each Creso share held.
Once the deal has been completed, Creso shareholders will hold about 13% of the issued capital in the merged entity.
As part of the agreement, Creso's co-founder and chief executive officer Dr Miri Halperin will join the merged entity's board.
Creso's board unanimously endorses acquisition
Creso's board has unanimously backed PharmaCielo's takeover offer in absence of superior offer.
The board described the offer as "attractive" claiming it meets Creso's short-term investment requirements to execute its growth plans.
"This arrangement with PharmaCielo is an incredible opportunity for Creso security holders to benefit from being part of a best in class and well-capitalised global medicinal cannabis company," Dr Halperin Wernli said.
"The combined companies will offer a unique combination of assets and professional skills across the cannabis value chain that will lay the foundations for significant international expansion of cannabis products of the highest quality for the benefits of patients and consumers," Dr Halperin Wernli added
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