WeedMD Inc. (
TSX-V:WMD)
(OTCQX:WDDMF) (FSE:4WE)
(“
Entourage” or the “
Company”), a
federally licensed producer and distributor of medical-grade
cannabis is pleased to announce it has entered into a definitive
agreement (the “
Acquisition Agreement”) to acquire
all of the issued and outstanding shares of renowned craft
cultivator CannTx Life Sciences Inc. (“
CannTx”) in
an all-stock transaction (the “
Acquisition”). The
Acquisition, which is subject to CannTx shareholder approval as
well as other customary closing conditions, is expected to close in
late August 2021. Upon closing, CannTx, which operates out of its
licensed production facility in Guelph, Ontario will continue doing
business as a wholly owned subsidiary of Entourage.
Entourage is also pleased to announce it has
changed its corporate name from “WeedMD Inc.” to “Entourage
Health Corp.” Visit our new website here, expected to be live at
market opening on or about July 16, 2021.
In connection with the rebranding, the Company’s
common shares (“Common Shares”), convertible
debentures maturing September 25, 2022 (the
“Debentures”), Common Share purchase warrants
expiring September 25, 2022 (the “2022 Warrants”),
and Common Share purchase warrants expiring March 12, 2023 (the
“2023 Warrants”), are expected to commence trading
on the TSX Venture Exchange (the “TSXV”) under their respective
ticker symbols “ENTG”, “ENTG.
DB”, “ENTG.WT”, and
“ENTG.WT.A”, at market opening on or about July
16, 2021.
“This is an exceptional period of growth and
opportunity for our Company. Following a year of reflection,
transformation and evolution, today - alongside CannTx - we are
emerging as a differentiated cannabis operator under Entourage
Health which continues to uphold a value system rooted in quality
production and consumer excellence,” said George Scorsis, Interim
CEO and Executive Chairman, Entourage Health Corp. “With this
acquisition, we will partner to deliver innovative, consistent
products and cannabis experiences to a growing Canadian consumer
base, utilizing proprietary genetics, IP, and led by the finest
industry experts. With over 2,000 current product listings across
the nation, near-perfect fulfilment rates in all channels for our
award-winning products, and a reach that covers 90% of the market,
by end of summer we will be present in all segments including
premium craft production. This growth strategy will solidify our
business, and put us on a rapid trajectory to reaching our
profitability goals by enhancing our existing practices and adding
accretive products to our portfolio.”
“We are thrilled to be adding our craft methods,
growth vision and brands as we transition together into the aptly
named Entourage,” said Mike Abbott, President, CEO and Co-Founder
of CannTx. “As long-time peers and partners, we are aligned in our
cultivation and production philosophies anchored by a purpose-built
infrastructure that will expand product distribution to more
Canadians seeking cannabis produced with passion and heart. The
data is clear – cannabis consumers value quality and reliability.
Smaller producers and micros are taking greater market share
because consistent, quality production matters. The commercial
value of our industry learnings alongside the talent, assets, and
capabilities that our merged company now possesses is unparalleled
and we are excited to move forward united as one team.”
Upon closing, the Acquisition will create an
entity that will house one of the most comprehensive genetic banks
in the industry, further strengthening the Company’s already robust
cultivation and high-margin processing operations for new strain
and product expansion, which now includes hash and rosin
production. In addition to its tissue culture, micropropagation and
craft cultivation specialties, CannTx will fold in its B2B
Steadystem Solutions and adult-use craft brand Royal City Cannabis
Co. to the brand portfolio that includes Color Cannabis, Saturday
Cannabis, Starseed Medicinal and Mary’s Medicinals Canada.
Over the past year, Entourage has been
collaborating with CannTx to preserve the Company’s genetic assets
to consistently and perpetually grow the same great products on
which its award-winning reputation is built. CannTx is currently
expanding Entourage’s genetics bank and cultivars’ lifecycle with
its rejuvenation techniques and genetic assets storage.
Benefits of the Acquisition to Entourage
and CannTx:
-
Complementary Operations and Premium Craft Brand:
Entourage’s low-cost southwestern Ontario production platform and
robust sales channels are expected to generate improved margins
with the addition of craft brand Royal City Cannabis Co. which was
recently added to a select group of “Craft Cultivators” by the
Ontario Cannabis Store. CannTx’s indoor craft cultivation
operations in Guelph, Ontario will be maintained as the Company’s
craft and specialty production site for rosin and hash processing.
Entourage’s low-cost, state-of-the-art greenhouse and outdoor
cultivation operations housed in Strathroy continues to be the
primary cultivation hub. Its Aylmer extraction facility is
maintained as its primary biomass processing facility where oils,
capsules, balms and vape products are currently produced and also
serves as its medical cannabis and retail packaging centre.
- Further
Strengthens Distribution Capabilities: In addition to
expanding its cultivation footprint into the craft market,
Entourage will leverage CannTx’s international relationships to
market new and innovative consumption methods to emerging cannabis
markets in the Americas and Europe. Additionally, CannTx’s
affiliation with the University of Guelph and other learning
institutions will broaden Entourage’s network for research and
development. The Company has the necessary infrastructure to meet
emerging industry demand, including an expanding medical cannabis
portfolio and the rapidly growing retail environment in 2021.
- Broadened
Technical Expertise and Proprietary Assets: With its
limited overlap in talent, CannTx’s management team will bring
extensive propagation, agricultural, and science-based experience,
as well as strategic industry and client relationships. Its
proprietary Steadystem Solutions program collects tissues from
donor plants and regenerates them using an in-vitro platform to
re-produce and maintain historical cannabinoid and terpene
profiles, while removing bacterial, fungal, entomological, and
viral pathogens and is a valuable and unique asset. These strengths
will be complementary to Entourage’s cultivation and
product-focused skillsets.
Acquisition and Transaction Summary
Upon closing of the Acquisition, Entourage will
issue up to 62,500,000 Common Shares to CannTx shareholders,
subject to adjustment in accordance with the Acquisition Agreement.
The Acquisition values CannTx at up to approximately $17.5 million
based on an Entourage Common Share price of $0.28 per share. Upon
closing of the Acquisition, an aggregate of approximately 3,571,000
Common Shares will be held in escrow to secure indemnification and
other obligations undertaken by certain vendors in the Acquisition
Agreement.
The directors, officer and certain shareholders
of CannTx, who collectively beneficially own, or exercise control
or direction over, 21,717,668 CannTx common shares (“CannTx
Shares”) (representing approximately 48.1% of the issued
and outstanding CannTx Shares), have entered into voting support
agreements pursuant to which each has agreed to vote their CannTx
Shares in favour of the Acquisition and all other matters in favour
of the Acquisition.Concurrent with the closing of the Acquisition,
it is expected that two nominees from CannTx shall join the
Entourage board of directors. In addition, certain members of
CannTx’s management will join the Entourage management team.
Completion of the Acquisition remains subject to
the satisfaction or waiver of all closing conditions, including the
receipt of all required regulatory approvals. The Acquisition is
expected to close in late August 2021.
Entourage Approval and
Recommendation
Entourage’s Board of Directors (the
“Entourage Board”) has unanimously approved the
Acquisition, determining that it is in the best interests of
Entourage. The Entourage Board also received a fairness opinion
(the “Fairness Opinion”) provided by Deloitte
that, subject to the assumptions, qualifications and limitations
contained in the Fairness Opinion, the consideration being paid to
CannTx pursuant to the Acquisition, is fair, from a financial point
of view to Entourage.
CannTx Approval and
Recommendation
The CannTx Board of Directors (the
“CannTx Board”) has unanimously approved the
Acquisition, determining that it is in the best interests of CannTx
and its shareholders.
Advisors and Counsel
Deloitte is acting as financial advisor to
Entourage and provided an independent Fairness Opinion to the
Entourage Board. Dentons Canada LLP is acting as legal counsel to
Entourage.
WeirFoulds LLP is acting as legal counsel to
CannTx.
For an overview of Entourage Health Corp.,
access our corporate video here. Access our latest investor
presentation and corporate deck here.
About Entourage Health
Corp.
Entourage Health Corp. (previously known as
WeedMD Inc.) is the publicly traded parent company of WeedMD RX
Inc. a licence holder producing and distributing cannabis products
for both the medical and adult-use markets. The Company owns and
operates a 158-acre state-of-the-art greenhouse, outdoor and
processing facility located in Strathroy, ON as well as a
fully-licensed 26,000 sq. ft. Aylmer, ON processing facility,
specializing in cannabis extraction. With the addition of Starseed
Medicinal, a medical-centric brand, Entourage has expanded its
multi-channeled distribution strategy. Starseed’s industry-first,
exclusive partnership with LiUNA, the largest construction union in
Canada, along with employers and union groups complements
Entourage’s direct sales to medical patients. The Company maintains
strategic relationships in the seniors’ market and supply
agreements with Shoppers Drug Mart as well as eight provincial
distribution agencies where adult-use brands Color Cannabis and
Saturday are sold.
Follow Entourage and its brands on
LinkedIn
Twitter: Entourage,
Color Cannabis, Saturday
Cannabis &
Starseed
Instagram: Entourage,
Color Cannabis, Saturday
Cannabis &
Starseed
For further information, please
contact:
For Investor Enquiries:Valter
PintoManaging Director KCSA Strategic
Communications1-212-896-1254weedmd@kcsa.com
For Media Enquiries:Marianella
delaBarreraVP, Communications & Corporate
Affairs416-897-6644marianella@weedmd.com
Forward Looking Information
This press release contains "forward-looking information" within
the meaning of applicable Canadian securities legislation which are
based upon WeedMD's current internal expectations, estimates,
projections, assumptions and beliefs and views of future events.
Forward-looking information can be identified by the use of
forward-looking terminology such as "expect", "likely", "may",
"will", "should", "intend", "anticipate", "potential", "proposed",
"estimate" and other similar words, including negative and
grammatical variations thereof, or statements that certain events
or conditions "may", "would" or "will" happen, or by discussions of
strategy. Forward-looking information in this press release
includes, but is not limited to, statements in respect of the
Acquisition, including the proposed terms and potential closing
thereof and the potential synergies and impact on the prospects of
Entourage to be realized as a result of the Acquisition.
The forward-looking information in this news
release is based upon the expectations, estimates, projections,
assumptions and views of future events which management believes to
be reasonable in the circumstances. Forward-looking information
includes estimates, plans, expectations, opinions, forecasts,
projections, targets, guidance or other statements that are not
statements of fact. Forward-looking information in this news
release include, but are not limited to, statements with respect to
internal expectations, expectations with respect to actual
production volumes, expectations for future growing capacity and
the completion of any capital project or expansions.
Forward-looking information necessarily involve known and unknown
risks, including, without limitation, risks associated with general
economic conditions; adverse industry events; loss of markets;
future legislative and regulatory developments; inability to access
sufficient capital from internal and external sources, and/or
inability to access sufficient capital on favourable terms; the
cannabis industry in Canada generally; the ability of
Entourage to implement its business strategies; the COVID-19
pandemic; competition; crop failure; and other risks.
Any forward-looking information speaks only as
of the date on which it is made, and, except as required by law,
Entourage does not undertake any obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise. New factors emerge from
time to time, and it is not possible for Entourage to predict all
such factors. When considering this forward-looking information,
readers should keep in mind the risk factors and other cautionary
statements in Entourage’s disclosure documents filed with the
applicable Canadian securities regulatory authorities on SEDAR at
www.sedar.com. The risk factors and other factors noted in the
disclosure documents could cause actual events or results to differ
materially from those described in any forward-looking
information.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THIS RELEASE
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