TORONTO, March 4, 2019 /CNW/ - Harvest One Cannabis
Inc. (TSXV: HVT, OTCQX: HRVOF – "Harvest One") and Delivra
Corp. (TSXV: DVA – "Delivra") are pleased to announce
today that they have entered into a definitive arrangement
agreement (the "Arrangement Agreement") pursuant to
which Harvest One will acquire all of the issued and outstanding
common shares of Delivra (the "Delivra Shares") (the
"Transaction"). Under the terms of the Arrangement
Agreement, shareholders of Delivra ("Delivra Shareholders")
will receive 0.595 common shares of Harvest One (the "Harvest
One Shares") for each Delivra Share (the "Exchange
Ratio").
Harvest One, an international cannabis house of brands in the
self-care and health and wellness space, has acquired Delivra as a
means to further its strategy of providing trusted, effective
products to help people in their daily lives. The acquisition of
Delivra and its LivRelief™ brand, which produces a variety of
topicals and creams with existing distribution channels across
Canada, will position Harvest One
well when cannabis-infused products are legalized in Canada, which is expected in the fall of
2019.
"The acquisition of Delivra by Harvest One puts further emphasis
on the Harvest One goal of being a leading house of brands in the
global health, wellness, and self-care sector. The addition of
LivRelief™, which is already on retail shelves across Canada, will give Harvest One a head start for
cannabis-infused products in Canada and beyond and is a great addition to
our existing brands in this space with Satipharm CBD GelPell
capsules already on sale in Europe, and our Dream Water all natural sleep
aid available across North
America" said Grant Froese,
CEO of Harvest One. Mr. Froese added, "We are very excited to
welcome Dr. Joseph Gabriele and the
Delivra team into the Harvest One family and expanding our brand
portfolio, as well as moving forward aggressively with our
cannabis-infused products strategy when and where legal."
Dr. Joseph Gabriele, Director,
Chief Executive Officer, and Chief Scientific Officer of Delivra,
added, "The transaction with Harvest One is an exciting and
important step for our shareholders and is the result of an
extensive strategic review process. Harvest One is a global leader
in the cannabis space, focusing on innovative lifestyle and
wellness products. Combined with our proprietary transdermal
delivery system platform and extensive research, development and
commercialization capabilities, the combined company is extremely
well-positioned to take advantage of the growing market for
topicals, sprays, beverages, and other cannabis/CBD-infused
products. In addition, Harvest One's global reach can provide
greater distribution capabilities for our existing product
portfolio. This is a value-maximizing transaction that provides our
shareholders with a significant premium and an exciting opportunity
to participate in the upside of Harvest One. We believe that
Harvest One is the ideal partner to take Delivra to the next
level."
TRANSACTION RATIONALE
- Harvest One's acquisition of Delivra furthers the company's
health, wellness, and self-care strategy by adding LivRelief™ to
its brand portfolio
- Delivra has already begun formulation work for the infusion of
CBD and THC with the goal of integrating cannabinoid formulations
into their existing line of products
- Harvest One will benefit from the formulation expertise of
Delivra as it works to create a suite of brands and infused
versions of existing brands in the Harvest One portfolio, such as
Dream Water
- Delivra will immediately add to the revenue of Harvest One with
its existing distribution into Shoppers Drug Mart, Walmart, Loblaw,
Rexall, Pharmasave, London Drugs, and other major retailers in
conjunction with Harvest One's existing distribution of Dream Water
in 30,000 stores across North
America
- The addition of Dr. Gabriele's expertise in pain relief R&D
will be a major boost for Harvest One's in-house formulation and
product development team for future brands and products
- Based on the closing trading price of the Harvest One Shares on
the TSX Venture Exchange ("TSX-V") on March 1, 2019, the Transaction represents a
premium of 27% to Delivra's closing trading price on the TSX-V on
September 28, 2018, the last trading
day prior to Delivra's announcement that it had hired Canaccord
Genuity Corp. ("Canaccord Genuity") to act as exclusive
advisor to Delivra to, among other things, explore strategic
alternatives available to Delivra
- The Transaction will result in additional liquidity for Delivra
Shareholders in terms of both volume and value of shares
traded
- Delivra Shareholders will represent approximately 13.4% of the
issued and outstanding Harvest One Shares (on a non-diluted basis),
giving Delivra Shareholders the opportunity to participate in the
future potential increase in the value of Harvest One, a leading
global cannabis house of brands company
TERMS OF THE TRANSACTION
The Transaction will be effected by way of a plan of arrangement
under the Business Corporations Act (Ontario). Under the terms of the Arrangement
Agreement, Harvest One will acquire all of the issued and
outstanding Delivra Shares, with each Delivra Shareholder receiving
0.595 Harvest One Shares for each Delivra Share. All outstanding
options and warrants of Delivra will similarly be exchanged for
corresponding securities of Harvest One based on the same Exchange
Ratio. After giving effect to the Transaction, Delivra
Shareholders will hold approximately 28.3 million Harvest One
Shares (representing approximately 13.4% of the issued and
outstanding Harvest One Shares (on a non-diluted basis)). Upon
closing, Delivra will become a wholly-owned subsidiary of Harvest
One. Based on the closing trading price of the Harvest One Shares
on the TSX-V on March 1, 2019, the
implied value equates to approximately $0.39 per Delivra Share, and represents a
total equity consideration of approximately $19 million.
The Transaction has been unanimously approved by the Board of
Directors of each of Harvest One and Delivra. In addition, Delivra
Shareholders holding approximately 28.7% of the issued and
outstanding Delivra Shares have entered into voting and support
agreements to vote in favour of the Transaction.
The Arrangement Agreement provides that Delivra is subject to
non-solicitation provisions, but also provides that Delivra may
consider an unsolicited superior proposal in certain circumstances
and a right, in favor of Harvest One, to match any such superior
proposal. The Arrangement Agreement also provides for the payment
by Delivra of a termination fee of $500,000 to Harvest One in certain circumstances.
Concurrently with the execution of the Arrangement Agreement, (i)
Harvest One has provided Delivra with a loan in the amount of
$250,000, bearing interest at a rate
of 6% per annum and having a 1-year term (the "Loan"), and
(ii) Harvest One and Delivra have entered into a services agreement
in the amount of $250,000, whereby
Delivra will provide Harvest One with certain product formulations
(the "Services Agreement").
The Transaction is subject to, among other things, the approval
of the Ontario Superior Court of Justice and requires the approval
of two-thirds of the votes cast by Delivra Shareholders at a
special meeting expected to be convened by Delivra in May, receipt
of required regulatory approvals and other customary conditions of
closing. Approval of shareholders of Harvest One is not required.
Additional details of the Transaction will be provided to Delivra
Shareholders in an information circular expected to be mailed in
April. It is currently anticipated that, subject to receipt of all
regulatory, court, shareholder and other approvals, the Transaction
will be completed in the second quarter of 2019.
Upon the completion of the Transaction, all current directors of
Delivra shall resign. In addition, Dr. Joseph Gabriele, the current CEO of Delivra,
will join the Board of Directors of Harvest One.
The Board of Directors of Delivra unanimously recommends that
Delivra Shareholders vote in favor of the resolution to approve the
Transaction. The Board of Directors of Delivra has obtained a
fairness opinion from Canaccord Genuity that states, based upon and
subject to the assumptions, limitations, qualifications and such
other matters as Canaccord Genuity considered relevant, Canaccord
Genuity is of the opinion that, as of March
3, 2019, the consideration to be received under the
Arrangement Agreement by the Delivra Shareholders is fair, from a
financial point of view, to the Delivra Shareholders.
FINANCIAL AND LEGAL ADVISORS
Aird & Berlis LLP acted as legal counsel and
PricewaterhouseCoopers LLP provided financial advisory services to
Harvest One.
Canaccord Genuity Corp. acted as financial advisor and Goodmans
LLP acted as legal counsel to Delivra. Canaccord Genuity Corp.
provided a fairness opinion to the Board of Directors of
Delivra.
ABOUT HARVEST ONE CANNABIS INC.
Harvest One is a global cannabis company that develops and
provides innovative lifestyle and wellness products to consumers
and patients in regulated markets around the world. The Company's
range of lifestyle solutions is designed to enhance quality of
life. Shareholders have significant exposure to the entire cannabis
value chain through three wholly-owned subsidiaries: United
Greeneries, a Licensed Producer; Satipharm (medical and
nutraceutical); and Dream Water Global (consumer), and a minority
interest in Burb Cannabis (retail operations). For more
information, please visit www.harvestone.com.
ABOUT DELIVRA CORP.
Delivra Corp. is a specialty biotechnology company having a
proprietary transdermal delivery system platform that can shuttle
pharmaceutical and natural molecules through the skin, in a
targeted manner. Delivra manufactures and sells a growing line of
natural topical creams with the proprietary transdermal delivery
system platform under the LivRelief™ brand, for conditions
such as joint and muscle pain, nerve pain, varicose veins, wound
healing, and sports performance. LivRelief™ products are
available in over 6,000 retail locations, including pharmacies,
grocery chains, and independent health food stores across
Canada, including, but not limited
to, Shoppers Drug Mart, Walmart, Loblaw, Rexall, Pharmasave, London
Drugs, and on-line at www.livrelief.com. In parallel with its
consumer products business, Delivra also has a mandate to license
its patent-pending, proprietary transdermal delivery technology
platform to pharmaceutical companies globally, for the repurposing
of pharmaceutical molecules transdermally to treat a broad range of
conditions, along with licensing its over-the-counter products
globally. Delivra is headquartered in Hamilton, Ontario and has a research and
development laboratory in Charlottetown, PEI.
Further information on Delivra can be found at
www.delivracorp.com and www.livrelief.com.
Cautionary Note Regarding Forward-Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable
securities law ("forward-looking statements").
Forward-looking statements are frequently characterized by words
such as "plan", "continue", "expect", "project", "intend",
"believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. Forward-looking
statements in this news release include, but are not limited to
statements with respect to accretive earnings, future financial
position and results of operations, anticipated benefits and costs
synergies associated with the Transaction, internal expectations,
estimated margins, expectations for future growing capacity, costs
and opportunities, liquidity of Harvest One Shares, effect of the
Transaction on the combined company and its future strategy, plans,
objectives, goals, targets and future developments, expectations
for receipt of licenses to process or distribute cannabis in legal
markets, the completion of any capital projects or expansions, the
terms of the Loan and the Services Agreement, the anticipated
timing for the special meeting of Delivra Shareholders and the
closing of the Transaction, the anticipated consideration to be
received by Delivra Shareholders, the satisfaction of closing
conditions including: (i) required Delivra Shareholder approval;
(ii) necessary court approval in connection with the Transaction;
(iii) certain termination rights available to the parties under the
Arrangement Agreement; (iv) Delivra obtaining the necessary
approvals from the TSX-V; (v) Harvest One obtaining necessary
approvals from the TSX-V for the listing of the Harvest One Shares
issuable under the Transaction; and (vi) other closing conditions,
including, without limitation, the operation and performance of the
Delivra business in the ordinary course until the closing of the
Transaction and compliance by Delivra with various covenants
contained in the Arrangement Agreement.
These statements are only predictions. Various assumptions
were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news
release, including assumptions regarding the expected growth,
results of operations, performance, industry trends and growth
opportunities for Harvest One and Delivra.
Forward-looking statements are based on the opinions and
estimates of management of Harvest One and Delivra at the date the
statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking statements, including, without limitation, risks
associated with general economic conditions; adverse industry
events; marketing costs; loss of markets; market or other events
limiting the liquidity of the Harvest One Shares; inability to
realize anticipated synergies; future legislative and regulatory
developments involving cannabis; inability to access sufficient
capital from internal and external sources, and/or inability to
access sufficient capital on favourable terms; the cannabis
industry in Canada and elsewhere
generally; income tax and regulatory matters; the ability of
Harvest One and Delivra to implement their business strategies;
competition; crop failure; currency and interest rate fluctuations
and other risks. Readers are cautioned that the foregoing list is
not exhaustive.
Management provides forward-looking statements because it
believes they provide useful information to readers when
considering their investment objectives and cautions readers that
the information may not be appropriate for other purposes.
Consequently, all of the forward-looking statements made in this
news release are qualified by these cautionary statements and other
cautionary statements or factors contained herein, and there can be
no assurance that the actual results or developments will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, Harvest One or
Delivra. In particular, there can be no assurance that the
Transaction will be completed. Readers are further cautioned not to
place undue reliance on forward-looking statements as there can be
no assurance that the plans, intentions or expectations upon which
they are placed will occur. Such information, although considered
reasonable by management at the time of preparation, may prove to
be incorrect and actual results may differ materially from those
anticipated.
These forward-looking statements are made as of the date of
this news release and neither Harvest One nor Delivra assumes any
obligation to update or revise them to reflect subsequent
information, events or circumstances or otherwise, except as
expressly required by applicable law.
Neither TSX-V nor its Regulation Services Provider (as
that term is defined in the policies of the TSX-V) accept
responsibility for the adequacy or accuracy of this
release.
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SOURCE Harvest One Cannabis Inc.
