Australian medicinal cannabis company Creso Pharma (ASX: CPH) has announced that it has entered an agreement to be acquired by a PharmaCielo for $122 million.
PharmaCielo is a cannabis group listed on Canada's TSX Venture Exchange, with a market capitalisation of $675 million.
The Canadian company is the parent of the largest cannabis producer in Colombia PharmaCielo Colombia Holdings.
The deal will be conducted through a scheme of arrangement between Creso and its shareholders and a separate concurrent scheme of arrangement between Creso and the holders of its listed options.
As part of the deal Creso Pharma shareholders will receive 0.0775 PharmaCielo shares for every Creso Pharma share held representing a value of $0.63 per share. For comparison, shares in Creso closed at $0.42 per share on Thursday.
If the takeover is approved, Creso securityholders will hold around 13 per cent of the issued shares in PharmaCielo, with PharmaCielo shareholders holding the remaining 87 per cent.
The board of Creso Pharma has unanimously recommended this deal with PharmaCielo, but Creso Pharma shareholders need not take any action at this point in time.
If the deal is to go ahead Creso Pharma's co-founder and CEO Dr Miri Halperin Wernli will join the board of PharmaCielo as a director.
"This arrangement with PharmaCielo is an incredible opportunity for Creso Pharma securityholders to benefit from being part of a best in class and well-capitalised global medicinal cannabis company," says Dr Wernli.
"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."
"The quality and scale of PharmaCielo's cultivation and oil extraction operations in Colombia complements our focus on meeting global demand for the highest quality cannabis-derived therapeutic, nutraceutical and animal health products through increased access to the necessary quality and volume of oil production."
Business News Australia