PhytoTech Medical mulls up medical cannabis JV
THE ROADHOUSE PHARMACY: PhytoTech Medical Limited (ASX: PYL), an Australian listed medical cannabis company, announced it has entered into an agreement to acquire 100 per cent of the issued capital of Canadia-based multinational vertically integrated medical cannabis company MMJ Bioscience Inc. (MMJ).
PhytoTech described the deal, which will see the two companies become the Cheech and Chong of the medical cannabis world, as a ‘merger of equals’, claiming it will strategically position it and MMJ as a diversified, global, growth-oriented and vertically-integrated medical cannabis company.
According to PhytoTech’s ASX announcement the directors of both companies are confident the deal is strategically and financially value enhancing to both businesses as it creates positive synergies for the combined group.
MMJ has three fully owned subsidiaries, which will join the merged entity.
These include, United Greeneries Ltd (horticulture entity, stage Marijuana for Medical Purposes Regulation (MMPR) applicant in Canada), Satipharm (pharmaceutical and nutraceutical developer and distributer in Europe), AgriChem Analytical (Canadian quality control and testing laboratory for medical cannabis, water, soil etc).
PhytoTech said it has sufficient existing funds available to meet the working capital requirements of MMJ until revenues commence, making the point the transaction does not require an equity raising.
The company said merging with MMJ at a pre license stage made sense as once its medical cannabis Duncan Facility on Vancouver Island is fully-licenced it will be able to produce and sell up to 700 kilograms of the product per year.
PhytoTech expects anticipated cash flows from the Duncan Facility and from sales of gastro-resistant Cannabidiol (CBD) supplements in the EU to fund future business expansion.
“We are extremely pleased to be partnering with a business that has a complementary asset portfolio and significant potential to become a key medical cannabis producer within the near future in Canada,” PhytoTech Medical managing director Boaz Wachtel said in the company’s announcement to the Australian Securities Exchange.
“Partnering at this important stage, provides significant benefits and synergies to both parties, and we expect substantial value uplift upon completion of each of the performance milestones structured into the deal.
“Furthermore, we are excited by the opportunity to produce and supply a GMP-produced CBD pill which, to our knowledge, will be the first of its kind in the medical cannabis market.”
Email: info@phytotechmed.com
Website: www.phytotechmed.com