Cronos Australia and CDA Health have agreed to merge, subject to shareholder approval.
Cronos Australia has agreed to acquire 100% of the issued share capital of CDA Health in a shares-plus-cash deal, with CDA shareholders holding approximately 73.7% of Cronos shares on completion, assuming the full cash component is paid.
CDA’s portfolio includes wholly-owned subsidiary Burleigh Heads Cannabis, which operates pharmacy-to-doctor online portal CanView, CDA Clinics, and hemp-based food brand Healthy Not High.
Founded in 2018 by Guy Headley, Dr Ben Jansen, Jessimine Jansen and Dr Matua Jansen, CDA has seen rapid growth over the last two years, generating more than A$21 million in sales for FY21 (unaudited) and reporting a profit.
Cronos Australia chairman Shane Tanner said: “The merger with CDA Health is another key milestone achieved by Cronos Australia since its IPO in late 2019. This transaction should propel the integrated business to a position of market leadership in Australia and position it for sustainable, profitable growth.”
Cronos Australia CEO Rodney Cocks added: “Moving forward as an executive team we are fully aligned in the bold vision for the company as we scale existing operations and move into new markets and exploit strategic opportunities.”
Cronos said the merger with CDA will lead to a material increase in the size and scale of its operations and should deliver a route to early profitability. It added the deal is unanimously endorsed and supported by its board, “subject to no superior proposal for Cronos Australia emerging”.
CDA founders Guy Headley and Dr Ben Jansen said: “The integrated Cronos Australia and CDA business will allow us to take the company to the next level of growth, both in Australia and offshore.”
Following completion, the Cronos board is expected to comprise Tanner (independent chairman), Cocks (non-independent executive director and CEO), Headley and Jansen (non-independent executive directors and founding directors of CDA Health), Dr Marcia Walker (independent non-executive director) and Kurt Schmidt (non-independent, non-executive director and Cronos Group president and CEO).