- The transformative acquisition is expected to connect Flora
Growth’s Colombian-grown cannabis directly with German-based
pharmaceutical and medical cannabis distribution.
- The deal establishes a foothold in Germany allowing for medical
cannabis sales across 1,200+ pharmacies and the distribution of
pharmaceutical products across 28 countries. The deal also provides
additional upside to Flora should Germany legalize adult-use,
recreational cannabis.
- Franchise Global Health (TSXV: FGH) revenues and gross profit
for the nine-month period ended September 30, 2022 were C$42.0
million (~US$32.7 million) and C$2.8 million (~US$2.5 million),
respectively.
- Flora Growth (NASDAQ:FLGC) reported $25.7 million in revenue
and $11.5 million of gross profit for the nine-month period ended
September 30, 2022.
- The all-stock acquisition of Franchise Global Health Inc.
includes the indirect acquisition of its subsidiaries, Phatebo
GmbH, a leading distributor of export pharmaceuticals and medical
cannabis products to the European Union, and ACA Müller ADAG Pharma
Vertriebs GmbH, which holds the first German medical cannabis
import and distribution license, granted in 2017.
Flora Growth Corp. (NASDAQ: FLGC) (“Flora'' or the “Company”), a
leading all-outdoor cultivator, manufacturer and distributor of
global cannabis products and brands, announced today, that, on
December 23, 2022, it closed the previously disclosed acquisition
of all of the issued and outstanding shares of Franchise Global
Health Inc. (TSXV: FGH) (“FGH”), a multi-national operator in the
medical cannabis and pharmaceutical industry, with principal
operations in Germany.
“We view this acquisition as transformational as Flora pursues
its strategic growth plan to lead the global market for cannabis
and its derivatives,” said Luis Merchan, Chairman and CEO of Flora.
“Flora has now secured a crucial footprint in an established
international cannabis market, providing a unique opportunity for
operational synergies and diversified growth. The acquisition adds
to our distribution network, expanding our client base, and
increases our ability to distribute wholesale cannabis products at
scale into the European Union.”
At the end of November, Flora announced it achieved revenues of
$25.7 million and gross profit of $11.5 million for the nine-month
period ended September 30, 2022, representing increases of 510% and
606%, respectively, year over year. As of September 30, 2022, the
Company had cash of $5.9 million. On December 13, 2022, Flora
raised gross proceeds of $5.0 million through a registered direct
offering, further bolstering its liquidity position.
FGH’s revenues and gross profit for the nine-month period ended
September 30, 2022 were C$42.0 million (~US$32.7 million) and C$2.8
million (~US$2.5 million), respectively. FGH’s German reportable
segment earned C$0.6 million (~US$0.5 million) in net income for
the same period.
FGH’s German businesses operate primarily in the pharmaceutical,
medical device and medicinal cannabis import and distribution
markets, servicing more than 1,200 pharmacies in Germany and
providing non-cannabis medical products to 28 additional
countries.
The transformative deal accelerates Flora’s expansion in
Europe’s largest medical cannabis market as Germany moves toward
the launch of an adult-use market estimated to be worth over $1
billion1 by 2026. The Company believes Flora and FGH’s combined
wealth of knowledge and intellectual property position the Company
well for the potential incoming recreational market.
“We are glad to complete this acquisition as we head into 2023.
Together, we can now offer one of the world’s leading cultivators
access to the burgeoning German market and establish new inroads
into other markets in the European Union,” said Clifford Starke,
CEO of FGH.
The medical cannabis market in Germany is valued at roughly $122
million2, with growth of ~25% in 2021 compared to 2020 and a CAGR
of ~55% since 2017. An estimated 150,000 German patients benefit
from medical cannabis and 90% of Germany’s population of 83 million
people are covered by statutory health insurance.
About the Transaction
The transaction was consummated by way of a statutory plan of
arrangement (the “Arrangement”) under the Business Corporations Act
(British Columbia), pursuant to which Flora acquired all the issued
and outstanding common shares of FGH in exchange for 43,525,951
Flora common shares. The Flora common shares delivered to the
former shareholders of FGH are restricted from being sold for a
period of ninety (90) days following the completion of the
Arrangement. Effective upon the closing of the Arrangement, Mr.
Starke, formerly the CEO of FGH, and Mr. Edward Woo, formerly the
COO of FGH, were appointed as members of Flora’s Board of
Directors. The Arrangement was approved by the Supreme Court of
British Columbia and by shareholders of FGH holding in excess of 66
2/3% of the votes cast at a meeting of FGH shareholders. For
further information on the Arrangement, reference is made to
Flora’s current report on Form 6-K, filed today with the Securities
and Exchange Commission.
About Flora Growth Corp.
Flora is building a connected, design-led collective of
plant-based wellness and lifestyle brands designed to deliver the
most compelling customer experiences in the world, one community at
a time. As the operator of one of the largest outdoor cannabis
cultivation facilities, Flora leverages natural, cost-effective
cultivation practices to supply cannabis derivatives to its
commercial, house of brands, and life sciences divisions. Visit
www.floragrowth.com or follow @floragrowthcorp on social media for
more information.
About Franchise Global Health Inc.
Franchise Global Health Inc., through its subsidiaries, is a
multi-national operator in the medical cannabis and pharmaceutical
industries, with principal operations in Germany and with
operations, assets, strategic partnerships and investments
internationally. FGH’s business objective is to develop a
fully-integrated, leading European medical cannabis business, with
the goal of providing high-quality pharmaceutical-grade medical
cannabis to distribution partners and, ultimately, to patients, at
competitive prices.
Cautionary Statement Concerning Forward-Looking
Statements
This press release contains “forward-looking information” and
“forward-looking statements” (collectively, “forward-looking
statements”) within the meaning of applicable Canadian and U.S.
securities legislation. Forward-looking statements reflect Flora’s
current expectations and projections about future events at the
time, and thus involve uncertainty and risk. The words “believe,”
“expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,”
“plan,” “estimate,” “intend,” “predict,” “potential,” “continue,”
and the negatives of these words and other similar expressions
generally identify forward looking statements. Such forward-looking
statements are subject to various risks and uncertainties,
including without limitation, statements regarding the operations,
business, financial condition, expected financial results,
performance, prospects, opportunities, priorities, targets, goals,
ongoing objectives, milestones, strategies, and outlook of Flora,
the successful implementation of FGH’s assets, the continued
success of FGH’s German business and the cannabis market, as well
as those described under the section entitled “Risk Factors” in
Flora’s Annual Report on Form 20-F filed with the U.S. Securities
and Exchange Commission on May 9, 2022, as amended, as such factors
may be updated from time to time in Flora’s periodic filings with
the U.S. Securities and Exchange Commission (the “SEC”), which are
accessible on the SEC’s website at www.sec.gov, and on Flora’s
issuer profile on SEDAR at www.sedar.com. Accordingly, there are or
will be important factors that could cause actual outcomes or
results to differ materially from those indicated in these
statements. Such factors, among other things, include: the timing
and unpredictability of regulatory actions; expectations of the
cannabis market; opposition to the cannabinoid industry; limited
operating history and net losses; exposure to product liability;
risks associated with product recalls; product viability;
regulatory, legislative, legal or other developments with respect
to its operations or business; product development; unfavorable
publicity or consumer perception; general economic conditions and
financial markets; the impact of increasing competition; the loss
of key management personnel; capital requirements and liquidity;
access to capital; the timing and amount of capital expenditures;
and general market and economic conditions. These factors should
not be construed as exhaustive and should be read in conjunction
with the other cautionary statements that are included in this
release and in Flora’s filings with the SEC and the applicable
Canadian securities commissions. While forward-looking statements
reflect Flora’s good faith beliefs, reasonable assumptions and
estimates of Flora, they are not guarantees of future performance.
Flora disclaims any obligation to publicly update or revise any
forward-looking statement to reflect changes in underlying
assumptions or factors, new information, data or methods, future
events or other changes after the date of this press release,
except as required by applicable law. You should not place undue
reliance on any forward-looking statements, which are based only on
information currently available to Flora (or to third parties
making the forward-looking statements).
1-Statista - Forecast sales of adult-use cannabis in Germany
from 2024 to 2026, by scenario
2-Statista - German Medical Market
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221227005068/en/
Investor Relations: Sean Mansouri, CFA ir@floragrowth.com
Commercial Wholesale: James Williams
James.Williams@floragrowth.com
Public Relations: Cassandra Dowell +1 (858) 221-8001
flora@cmwmedia.com
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