It certainly has been a great end to the week for the Creso Pharma Ltd (ASX: CPH) share price.
In morning trade the cannabis company's shares are up 36% following the receipt of a takeover approach.
What happened?
This morning Creso Pharma announced that it has entered into a scheme implementation agreement with Toronto Stock Exchange-listed PharmaCielo Limited, under which PharmaCielo will acquire Creso Pharma.
PharmaCielo is a fully licensed producer of medicinal cannabis oil products in Colombia and is the largest cannabis producer in Colombia. It believes the proposed acquisition will combine two complementary cannabis companies to create a well-capitalised, publicly traded company with a strong growth profile and significant strategic advantages.
According to the release, the acquisition will be conducted through a scheme of arrangement between Creso Pharma and its shareholders and a separate concurrent scheme of arrangement between holders of its listed options.
The share scheme is not dependent on the option scheme proceeding. However, the option scheme will only proceed if the share scheme proceeds.
What offer has been made?
Under the share scheme, Creso Pharma shareholders will receive 0.0775 PharmaCielo shares for each Creso Pharma share held. This represents an offer price of A$0.63 per Creso Pharma share, based on the three-day VWAP of PharmaCielo shares ending June 4 2019.
This is a 50% premium to Creso Pharma shareholders based on the closing price of Creso Pharma shares on June 6 2019.
Under the option scheme, Creso Pharma listed optionholders will receive 0.0185 PharmaCielo shares for each listed option held. This represents an offer price of A$0.15 per Creso Pharma listed option.
Combined, the offer implies a total equity value of A$122million for Creso Pharma. It is subject to a number of conditions including shareholder approval, court approval, and TSXV approval.
Creso Pharma's co-founder and CEO, Dr Miri Halperin Wernli, believes this is a good opportunity for shareholders.
She said: "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. 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."
Adding: "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."
This news appears to have sparked life into the local cannabis industry today. In early trade the likes of Auscann Group Holdings Ltd (ASX: AC8) and MMJ Group Holdings Ltd (ASX: MMJ) have surged 8% higher.
