PharmaCielo is listed on Canada's TSX Venture Exchange, with a current market capitalisation of approximately CAD$675 million (A$724 million) and owns Colombia's largest cannabis producer which is fully licenced to manufacture medicinal cannabis oil and extracts.
On 6 June 2019, PharmaCielo announced that it had entered into a Scheme Implementation Agreement (SIA) with Creso Pharma to acquire all of the issued and outstanding shares and listed options of Creso Pharma for A$122m. The acquisition will be conducted through a scheme of arrangement between Creso Pharma and its shareholders (Share Scheme) and a separate concurrent scheme of arrangement between Creso Pharma and the holders of listed options (Option Scheme).
Creso Pharma is a global medicinal cannabis company, headquartered in Australia and listed on the ASX, specialising in researching, developing and producing therapeutic, nutraceutical and animal health products.
Under the Share Scheme, Creso Pharma shareholders will receive 0.0775 PharmaCielo shares for each Creso Pharma share, representing an offer price of A$0.63 per share and a 50% premium over Creso Pharma's share closing trading price on 31 May 2019. Under the Option Scheme, Creso Pharma listed optionholders will receive 0.0185 PharmaCielo shares for each listed option held representing an offer price of A$0.15 per listed option. Holders of various other classes of unlisted Creso Pharma securities will be offered PharmaCielo shares based on ratios detailed in the SIA.
Following implementation, Creso Pharma securityholders will hold approximately 13% of the issued shares in PharmaCielo, with existing PharmaCielo shareholder holding the remaining 87%.
The transaction implies a total equity value of A$122 million for Creso Pharma.
The acquisition is significant for PharmaCielo as it will create a combined company that is poised to become a global powerhouse in the medicinal cannabis industry. In particular, the acquisition is expected to:
- add extensive on-self product portfolio available in multiple regions;
- expand PharmaCielo's global sales reach and market presence in Canada, Switzerland, Europe, Australia, New Zealand, Israel and Brazil;
- expand PharmaCielo’s R&D capabilities with expertise from Creso product and horticultural R&D experts in Switzerland and Israel;
- establish a vertically integrated supply chain;
- enable the continued participation by Creso Pharma shareholders in a global medicinal cannabis company with greater capitalisation enabling aggressive market and sales development; and
- enable PharmaCielo to benefit from the combined experienced of the Creso Pharma management team.
MinterEllison was instructed by PharmaCielo's long-standing Canadian lawyers, McMillan LLP (McMillan) to undertake Australian legal due diligence on Creso Pharma, which included navigating its complex capital structure comprising not only listed shares and listed options but also unlisted options, performance rights, performance shares and Canadian exchangeable shares. MinterEllison worked closely with McMillan to document the SIA and continues to advise on all Australian regulatory aspects of this acquisition, including the provision of secured interim bridge financing by PharmaCielo to Creso Pharma.
"We are delighted to be working once more with McMillan LLP to assist PharmaCielo execute this strategically important transaction," said Alberto Colla, MinterEllison's lead Partner advising PharmaCielo. "We would like to thank McMillan LLP and PharmaCielo for entrusting us with this important transaction."
"The acquisition of Creso Pharma will give PharmaCielo a greatly expanded global footprint and is expected to enable the combined company to benefit from extensive complementary assets and synergies," said Mr Colla.
The MinterEllison team was led by Alberto Colla (Partner) and Keith Tan (Special Counsel), with support from Bart Oude-Vrielink (Partner), Caitlin Chu (Special Counsel, finance) and Jack Fotheringham (Lawyer).
