Creso Pharma has taken another step towards completing the purchase of Health House International (HHI) and signalled its intention to continue its “near term” hunt for further acquisitions.
The two firms have signed a Scheme Implementation Deed that will pave the way for Creso to take full control of the Australian distribution firm in a deal worth up to A$4.6 million.
The near-108 million shares issued to HHI shareholders represents around 5.5% of Creso.
News of the deal’s progression comes after HHI completed the sale of German subsidiary CanPharma – which it acquired in 2021 – for €1.
In what has been an eventful few days for both companies, Creso, in an unrelated development, parted company with chairman Dr James Ellingford after a bizarre series of TikTok posts in which he documented his relationship with a woman 35 years his junior.
Ellingford has been replaced by non-executive director Boaz Wachtel.
Under the terms of the implementation deed, Creso will provide Health House with an additional $900,000 for working capital and pay off its debt to Zelira Therapeutics, incurred after a deal between HHI and Zelira collapsed in June.
Creso will pay $550,000 to Zelira immediately, with a further $800,000 paid in equity.
Additionally, Creso will pay another HHI debtor, Celtic Capital, $400,000 in convertible notes.
Creso managing director William Lay said Health House will provide the business with “strengthened global distribution, established partnerships into new markets and a revenue profile which will directly benefit our existing portfolio”.
“The group has continued to report strong financial results and we have a number of opportunities in train which can further accelerate this, while reducing costs through shared services,” he said, adding that Creso will provide “additional updates on potential M&A opportunities in the near term”.
Among the opportunities created by the Health House acquisition are the import into Australia of cannabis produced by Creso subsidiary Mernova Medicinal to “fast track cash flow breakeven”, the firm told the ASX.
Health House generated revenue of $15.6m in FY22, up 85% on the previous year, but saw losses deepen from $5.3m to $17m including a goodwill impairment of almost $9m.
In a further update to the ASX, Mernova has received an order for $280,000-worth of flower, its largest ever from Canadian wholesale distributor Weed Pool.
Meanwhile, Health House has completed the sale of CanPharma to Sabine Jacker. Jacker paid €1 for the company, but will also take on liabilities of $4.5m.
CanPharma founder Dr Henrik Sprengel has resigned effective immediately as executive director of Health House.