Adastra Holdings (CSE:XTRX, FRA:D2EA) Ltd announced that it has completed the acquisition of 1204581 BC Ltd, doing business as Phyto Extractions from the shareholders of Phyto Extractions.
With complete control of the popular Phyto Extractions brand asset, the company said it intends to leverage Phyto Extractions's proven product development expertise, skilled coast-to-coast sales force, and existing relationships with retail stores across Canada to drive accelerated growth and profitability for an expanded portfolio of Phyto Extractions-branded cannabis products.
The acquisition is expected to be immediately accretive to Adastra.
READ: Adastra Holdings sees record August sales of $1.7M driven by new products and markets for its Phyto Extractions brand
"Phyto Extractions has already gained the trust of over 1,400 retailers and consumers across Canada, representing over 70% of all regulated Cannabis retail stores,” Adastra CEO Michael Forbes said in a statement.
“I am confident that Adastra will leverage this position in the Canadian cannabis market to accelerate overall growth over the coming quarters as we enter new product categories.
“Adding flower and other SKUs, we expect to achieve $5 million in monthly sales by July 2022,” he added.
Phyto Extractions, a well-known brand in Canadian cannabis concentrates, was incorporated in 2019 in British Columbia. It licenses its intellectual property to Canadian cannabis license holders and collects royalties generated by selling cannabis consumer packaged goods to provincial distributors and retailers across the country.
Adastra issued 20 million common shares to the former shareholders of Phyto Extractions at a deemed share price of $0.96 per share, for total consideration of approximately $19.2 million. Under the terms of the arm’s length share purchase agreement, the vendors have agreed to a voluntary restricted period of four months and one day from the closing date of the acquisition.
Following the transaction, the company said it intended to drive accelerated growth and profitability through a comprehensive strategy of product innovation and enhanced retail engagement. Key elements of the strategy include the introduction of new products; optimizing its in-store presence; expanding its retail footprint; expanding its sales force; and realizing operating synergies.
Adastra is a leading manufacturer and supplier of innovative ethnobotanical and cannabis science products designed for the adult-use and medical markets and forward-looking therapeutic applications.
Contact the author at stephen.gunnion@proactiveinvestors.com