U.K. SPAC PLC, an AIM-listed cash shell, has inked an agreement that will see it become a European medical cannabis business.
It is to acquire 100% of Hellenic Dynamics, a cultivation company that has a partnership with soon-to-be London peer Kanabo Group PLC (LSE:KNB).
The reverse takeover deal is pitched at £45.2mln, with some 9.5bn new shares to be issued to the vendors at a price of 0.472p per share. Trading in U.K. SPAC will now be suspended, before an expected readmission of an enlarged group with a market capitalisation greater than £50mln as a standard listing on the London Stock Exchange's main market.
"I am delighted that the company has been able to contract to acquire this extremely exciting and impressive company which has the ambition and the potential to become one of the major growers of medicinal cannabis in Europe," said U.K. SPAC chair Peter Jay.
Davinder Rai, Hellenic vice president, added: “This is a major step forward for Hellenic as we look to establish ourselves as a leading cultivator of THC dominant medical cannabis in Europe and develop specialist strains of cannabis specific to individual medical ailments.
“With patient demand for medical cannabis increasing and a willingness among governments to regulate and open up this important market we are very optimistic about our future as a listed company."
The business
Hellenic Dynamics operates a 200,000 square meter facility in Northern Greece where it plans to grow, manufacture, process and sell THC-dominant dried medicinal cannabis flowers and related extracted oils for export.
Germany will be Its initial market, with aspacgreements already in place that anticipate first sales in the first quarter of 2022. It has arrangements with offtake partnerships with distributors in Germany which cover the anticipated first year of supply.
It also has an agreement with The American Farm School, which has a base in nearby Thessaloniki, which is expected to see joint research and development projects and training.
Kanabo partnership
In May, London-listed Kanabo invested in Hellenic Dynamics agreeing to acquire a £750,000 interest and agreed a wider strategic partnership.
A memorandum of understanding envisaged that Kanabo will buy from Hellenic up to 1,000 kilograms per year of EU GMP certified cannabis flowers with pre-defined THC or CBD contents. The pricing was not set in the May agreement.
In a separate statement on Monday, Kanabo welcomed the news of Hellenic Dynamics pending London listing.
“We believe that this acquisition will help Hellenic to work towards its goal of becoming a major cultivator of medicinal cannabis in Europe,” Kanabo said.
It added: “We look forward to working with Hellenic Dynamics to finalise the supply agreement for Cannabis flowers.”
Under the May agreement, Kanabo will receive Hellenic Dynamics shares at a 30% discount to the reverse takeover listing price, to the value of £750,000.