Arev Nutrition Sciences Inc (CSE:AREV) is set to buy cannabis strain-focused BC Bud Depot (BCBD) in a C$5.25mln deal, which provides the company with immediate revenue in legal jurisdictions, it said.
BCBD has one of the world's largest seed banks and has won over 40 awards over the past 14 years. Its breeding methods for new cannabis strains are available for licence to licenced production companies.
AREV also noted that in 2004, it was the first Canadian company in history to win a top strain at international competition with 'BC God Bud'.It has held the inside cover of High Times Magazine for the last ten years and remains among the most recognised names in cannabis genetics and breeding.
"This acquisition brings AREV into immediate revenue in legal jurisdictions. It also completes a very important part of the company's strategy to differentiate from cultivators while bringing them a secure source of revenue," Mike Withrow, director at AREV, told investors.
"This ensures that AREV will have consistent raw materials for ingredients that are extracted from the specific genetics grown for targeted areas of health and recreational experiences.
"These extracts will be used in the company's formula's for finished products and marketed in legal jurisdictions throughout the world."
The consideration is for 9.5mln AREV shares at a deemed price of 50 cents per share and C$500,000, of which $50,000 is payable in cash and C$450,000 is payable by way of a convertible debenture issued by the company, accruing interest at 8% per year, for a total value of C$5.25mln.
BC BUD Depot added: "This partnership allows us to accelerate breeding programs designed to improve existing strains and to release new cannabis strains likely to perform well in regulated markets both within Canada and, through licensed exports of genetic material, in legal jurisdictions worldwide."
Also in today's news release, the firm said it had acquired DEUTSCHE MEDIZINAL CANNABIS UG (DMC), which will become the group's wholly owned German subsidiary.
This is a strategic purchase as the procedure for granting production and distribution licenses for medical cannabis in Germany has been halted by a court decision and no licenses have been granted to any company in Germany.
DMC is one out of only 26 companies (of 118 that participated) which had been considered eligible by the relevant ministry, at all.
The acquisition cost €18,000 paid to four vendors, AREV said.
Shares were unchanged at C$0.56.