AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- Strategic Acquisition: Little Green Pharma acquires Health House to enhance vertical integration.
- Low-Cost Deal: The acquisition cost is $375,000, a fraction of the $10.9 million price tag listed in 2024.
- Market Reaction: LGP shares rose 4% to 11.5 cents following the announcement.
Little Green Pharma Ltd (ASX:LGP) has finalised a binding sale and purchase agreement (SPA) to acquire HHI (Australia) Pty Ltd, the owner of Health House, a well-established medicinal cannabis distribution business. The acquisition marks a significant step in LGP’s vertical integration strategy, strengthening its position in the rapidly evolving Australian medicinal cannabis industry.
Strategic Rationale and Deal Value
The acquisition aligns with LGP’s growth strategy, leveraging Health House’s established distribution network and annual revenue of $7.5 million (unaudited). Notably, the business has already achieved cashflow breakeven, making it a valuable asset for LGP’s portfolio.
LGP is acquiring Health House, along with its property, plant and equipment (PPE), inventory, and intellectual property, for just $375,000—significantly lower than the $10.9 million price tag listed by its former parent company, Melodiol Global Health (in liquidation), in September 2024.
The payment breakdown includes:
- $75,000 deposit already paid.
- $171,000 payable immediately.
- Remaining $129,000 due in 40 days, once 31 January 2025 working capital is finalized.
LGP will also absorb Health House’s estimated $350,000 net liability position, excluding payables due to LGP.
Operational Integration & Market Impact
Following completion, LGP will seamlessly integrate Health House’s operations, systems, and personnel, ensuring minimal disruption to business continuity. Given Health House’s long-standing partnership with LGP, the acquisition is expected to create strong synergies, streamlining the company’s supply chain and bolstering its distribution capabilities.
The market responded positively to the news, with LGP shares rising 4% to 11.5 cents per share at the time of writing. Investors are likely encouraged by the low acquisition cost and the potential for revenue growth and operational efficiencies.