The Althea Group Holdings Ltd (ASX: AGH) share price has returned from its trading halt with a bang this morning.
At the time of writing the cannabis company's shares are up a sizeable 12% to $1.34.
Why was Althea in a trading halt?
Althea requested a trading halt at the end of last week whilst it prepared a capital raising to fund an acquisition.
This morning the company announced that it has agreed to acquire Canadian extraction and contract manufacturing company Peak Processing Solutions from Gregg Battersby, a former director of the company, and eight employee shareholders.
The release explains that Althea will provide C$4.1 million cash (less the amount of any third-party debt held by Peak Processing Solutions) and 1,331,384 shares to the employee shareholders and 5,502,455 shares to Gregg Battersby.
A further 19,018,007 shares will be issued to Gregg Battersby and the employee shareholders subject to performance targets.
What is Peak Processing Solutions?
Peak Processing Solutions is a Canadian extraction and contract manufacturing company founded by four former senior personnel from cannabis giant Aphria Inc.
It is an early-stage business set up to operate under new Canadian regulations and to specialise in extraction, toll processing, and contract manufacturing of cannabis-infused edibles, drinks, nutraceuticals and cosmetics products.
Management believes the business is well-positioned to become a leading contract manufacturer for consumer brands looking to launch recreational cannabis and cannabidiol (CBD) wellness products.
Capital raising.
The cash component of the consideration to be paid by Althea will be funded via a A$30 million placement.
According to the release, the placement will be conducted at A$1.00 per new share, which represents a 16% discount to the last close price.
In addition to acquiring Peak Processing Solutions, funds are being allocated to the growth of its existing Australian and UK businesses (~$8.2 million) and international expansion opportunities (~$2.6 million).
Althea Chief Executive Officer Josh Fegan said: "We are very pleased to have entered into this agreement to acquire Peak Processing Solutions, including their team of tremendously experienced cannabis operators. We see huge potential in the cannabis-infused segment and on top of delivering great value to our shareholders, Peak provides Althea access to innovative technologies and cannabis delivery systems which we can utilise to enhance our range of medicinal cannabis product offerings."
Elsewhere in the industry things have been a bit mixed this morning. The Auscann Group Holdings Ltd (ASX: AC8) share price has tumbled over 1% lower and the Cann Group Ltd (ASX: CAN) share price has edged 0.5% higher.
