London medical cannabis R&D company acquires international supplier for potential £36m
London based medical cannabis R&D company Kanabo Group PLC announced it has finished the majority of its due diligence work as part of the proposed acquisition of the European businesses of 11157353 Canada Corp (Materia).
As previously announced in July 2021, the proposed transaction contemplates the full acquisition of Materia’s European business, including its Maltese EU GMP certified facility, German medical cannabis wholesaler and UK CBD e-commerce platform.
The head of terms states that the consideration for the proposed transaction, which will be subject to the execution of the share purchase agreement and completion, will be satisfied via an initial payment of CAN$20m (c.£12m).
In addition to the initial consideration, Materia will be paid an additional consideration of up to CAN$40m (£24m), subject to achieving certain operational and financial milestones including, but not limited to sales of £17.73m for the 12-month period to December 31, 2022, as well as sales of £29.55m for the 12-month period to December 31, 2023.
Materia CEO Deepak Anand commented: “As the transaction has progressed the potential for the combined company to establish itself as a market leader has become even more evident. Materia’s and Kanabo’s assets are highly complementary and together represent a differentiated cannabis company poised to advance the industry.”
Kanabo CEO Avihu Tamir added: “We are very pleased with the progression of the transaction since the non-binding heads of terms were announced. I see the decision to merge with Materia as a strategic move that will allow a smooth expansion into our primary markets by solidifying our supply and distribution channels.
“We are confident that it will enable our enlarged group to lead the UK and German medical cannabis markets over the next few years and I believe it will fulfil our promise to shareholders to create significant revenue.”
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