Cronos Australia shareholders have approved its merger with CDA Health in a deal previously described as a “game changer” by Cronos chief executive Rodney Cocks.
Completion of the agreement, announced in September and confirmed this morning, sees CDA become a wholly-owned subsidiary of Cronos.
CDA shareholders, who received 403 million shares and A$5 million cash for 100% of the company, will hold approximately 73.6% of the combined group.
Cronos chairman Shane Tanner will continue to serve as independent non-executive chairman of Cronos Australia with Cocks remaining as CEO and director and Tom Howitt continuing as chief financial officer and secretary.
CDA founders Guy Headley and Dr Benjamin Jansen have joined the board of the combined group along with Cronos Group CEO Kurt Schmidt and Dr Marcia Walker.
Four Cronos Australia directors — Jason Adler, Anna Burke, Daniel Abrahams and Michael Gorenstein — have stepped down.
Guy Headley told the company’s shareholders last month that joining forces with Cronos “has the potential to create a market leader in the Australian listed medicinal cannabis space”.
“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,” he and joint founder Dr Jansen said.
The companies said the merger will deliver a “route to early profitability for the combined group”.
Writing in its annual report, Tanner and Cocks told Cronos shareholders: “CDA has experienced rapid growth over the last two financial years, generating more than $21 million in sales in FY2021 while at the same time generating a profit.
“Further, CDA, which is already a major distributor of the company’s Adaya range of products, also owns a number of well-established brands which hold prominent positions in the Australian medicinal cannabis industry.
“These brands, together with the company’s existing portfolio of brands, should deliver a number of important synergistic benefits for the integrated group where we believe the combined value exceeds the sum of its parts.”
Cronos will remain listed on the ASX with the group expected to have a market capitalisation of $115 million.
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.