BREAKING: Zelira Therapeutics is set to acquire medicinal cannabis distributor Health House International in a move that will give the company “control of direct access to highly regulated European markets for its products”.
The deal, announced to the ASX this morning, will see Zelira acquire 100% of Health House shares by way of a scheme of arrangement.
Under the terms of the scheme, Health House will take a 19.45% interest in Zelira.
The transaction is conditional on due diligence of Health House by Zelira.
Zelira said the deal “will create an organisation with strong medicinal cannabis product and distribution capabilities”.
Founder and chairman Osagie Imasogie said: “The proposed acquisition of Health House will provide Zelira with control of direct access to highly regulated European and other markets for its products.
“In addition, the successful conclusion of this transaction will improve the margin to Zelira from products that will be directly sold in the markets in which Health House is currently active.
He said it will also provide Zelira with direct access to GMP manufacturing facilities in Europe “that will further improve margins for our products and provide stronger control of our product cycle”.
Imasogie added: “In addition this transaction will provide Zelira with control of direct access to high quality international standard clinical trial capabilities for our proprietary cannabinoid-based products.
“This will materially improve the speed at which these products can obtain clinical validation while improving the cost of such clinical trials. We look forward to welcoming Health House shareholders as important members of our mutually enhanced Zelira.”
Health House founder and chairman David Wheeler described the deal as a “proposed merger” that will deliver “strategic opportunities to increase margins and save costs”.
“Health House currently distributes Zelira’s Rx formations in Australia and have an agreement in place to distribute the SprinjeneCBD toothpaste in the UK,” Wheeler said.
Manufacturing in house will further improve margins, he said, and provide stronger control of product life cycle.
Wheeler added: “Zelira’s research team and Health House’s European-based Kalapa Clinic will provide an opportunity to materially improve the speed at which these products can obtain clinical validation while improving the cost of such clinical trials.”
Zelira will provide Health House with a short-term loan of $1.5 million to help with its immediate working capital requirements.
Health House distributes medicinal cannabis across Australia, the UK and Europe, and currently distributes products from 14 producers to pharmacies, prescribers, clinics and researchers across Australasia
It is also a licensed importer and exporter.
Share in Health House dropped 12% this morning to $0.051 while Zelira’s stock climbed 4% to $0.026.
The agreement is the second major deal in the sector over the past few weeks. It follows the acquisition of CDA Health by Cronos Australia just prior to Christmas.