Summary
- AusCann Group has signed a scheme implementation deed to acquire 100% share capital of CannPal.
- The transaction would be an attractive opportunity for the shareholders of both the companies due to strengthened leadership along with an opportunity to utilise the research, technology and knowledge across human and animal health.
- Financial position would get a boost.
Australian Pharmaceutical company AusCann Group Holdings Ltd (ASX:AC8) has entered a scheme implementation deed with CannPal Animal Therapeutics Limited to acquire 100% issued share capital of CannPal.
Under the terms of the Scheme Implementation Deed, the shareholders of CannPal would be given 1.3 new fully paid ordinary shares in AC8 for each fully paid ordinary share in CannPal. The offer values each share in CannPal at A$0.184, pegging the total value at approximately A$17.5 million. The value represents a 54% premium to CannPal’s 1-week VWAP of A$0.1195.
The Scheme Implementation Deed is subject to customary conditions which include CannPal shareholder approval plus court consents as per Part 5.1 of the Corporations Act 2001.
AusCann Group focuses on the development, production and distribution of cannabinoid-based medicines within Australia and globally. At the same time, CannPal Animal Therapeutics Limited is an animal health Company which aims to give owners of pet animals and veterinarians with superior, evidence-based, plant-derived therapeutic items to encourage improved health and comfort for animals.
AusCann believes that the combination of the two businesses is an attractive opportunity for the shareholders of both the Companies due to strengthened leadership along with the opportunity to utilise the research, technology and knowledge across human and animal health.
Further, it would also bolster the financial position and economies of scale that places the merged group to generate long-term sustainable growth.
Transaction rationale
- Through this transaction, the Company expects to create an extended and complementary product portfolio plus pipeline across human and animal health. It includes two products in the market, two products anticipated to be launched in the next 12 months. Further, the Company expects that the transaction would result in a medium-term pipeline of Animal and Human products that would be researched and developed as per any specific requirement.
- The transaction is expected to expand the geographical presence of the Company in countries like US, Australia, MEA, Germany and other major markets.
- The transaction would provide improved and complementary R&D capabilities.
- There would be a significantly integrated balance sheet, infrastructure plus the present AusCann R&D facility that would help the business to accelerate development as well as the commercialisation of the pipeline and the market penetration of the existing products of both the companies.
- There would also be an opportunity where the businesses can gain synergies via shared R&D, staff and administration, intellectual property, along with procurement synergies.
- Through this transaction, the leadership team is also expected to get strengthened.
- The transaction would help in attracting strategic and institutional investors and support the Company to pursue growth opportunities and increase shareholder value.
GOOD READ: Guide to the Medical Cannabis Market in Australia
