Sativa Group PLC (LON:SATI) has received a takeover bid from Canadian-listed cannabinoid (CBD) extraction and agriculture specialist Stillcanna Inc.
The offer, which was unveiled after Wednesday’s London close, will see Stillcanna offer 0.33507 new shares for each Sativa share, valuing the Aquis-listed company’s entire share capital at around £10.66mln.
The offer represents a 28.6% discount to Sativa's middle market closing price of 2.6p per share on April 21, when a deal was first mooted, and the group noted that following the deal its shareholders will own around 65% of the combined entity.
The company said its directors intended to unanimously recommend the offer to shareholders and that they had irrevocably undertaken to vote in favour of the deal with their own holdings, representing around 42% of Sativa’s shares.
The first news of a potential takeover emerged in late April, when Sativa said it had signed a letter of intent with Stillcanna for a potential transaction that the company said presented a “unique opportunity to create a leading European CBD seed to consumer company”.
"We are very excited about the combination of the Sativa Group PLC and StillCanna Inc. This creates a true European "seed to consumer" CBD wellness and medicinal cannabis group; cultivating and extracting the highest quality CBD, through to developing and producing the highest quality finished consumer products”, Sativa chief executive Henry Lees-Buckley said in a statement.
“This integrated approach supported by optimized production capabilities and laboratory testing allows us to position our brands for strong sales growth not only in the UK but across Europe", he added.
Five-fold revenue increase
In a separate announcement, also after yesterday’s close, Sativa reported its results for the year ended December 31, 2019, which saw its revenues increase more than five-fold to £1.45mln from £0.26mln while its gross margins improved to 52% from 42% due to a decrease in the cost of CBD extract and production efficiencies.
The company alsso noted that it completed a £1.38mln share placement and subscription in December, while the company’s pre-tax loss in the year widened to £3.6mln from £1.8mln.
Sativa also reported figures for the first quarter of 2020, posting revenues of £0.36mln, 49% higher than the prior-year and gross profit of £0.21mln with a 59% margin, ahead of management expectations.
The group’s EBITDA loss in the first-quarter was £0.76mln was also in-line with the company's predictions, while it had a cash balance of £1.1mln at the period end.
Sativa said its results for January and February were in line with its expectations, however, it had missed forecasts in March due to the coronavirus pandemic.
"While we experienced very solid revenue and gross margin growth in 2019, we were building a strong foundation for accelerating sales in 2020 and beyond. Building leading brands for multiple consumer channels and online is the priority”, Lees-Buckley said.
Shares in Sativa were trading at around 2.3p on the Aquis Exchange on Thursday morning.
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