Kanabo Group (LON: KNB) shares are gaining Thursday after the company provided an update on its acquisition of the European businesses of Canada Corp, which trades under the name of Materia.
The company said it has finished the majority of its due diligence work as part of the proposed acquisition.
As a result, Kanabo and Materia have signed a revised term sheet with binding components, which they regard as an essential step. The proposed transaction calls for the full acquisition of Materia's European company, including its Maltese EU GMP certified facility, German medical cannabis distributor, and UK CBD e-commerce platform.
Kanabo said an agreement has been reached on the majority of commercial terms.
The acquisition agreed on values Materia at C$20 million initially (around £12million), with up to an additional C$40 million (around £24million) payable in new Kanabo shares, upon the fulfillment of post-completion performance milestones.
Both the initial consideration and the earn-out consideration will be paid through the issue of shares in the company.
Kanabo CEO Avihu Tamir commented, “I see the decision to merge with Materia as a strategic move that will allow a smooth expansion into our primary markets by solidifying our supply and distribution channels. We are confident that it will enable our enlarged group to lead the UK and German medical cannabis markets over the next few years and I believe it will fulfil our promise to shareholders to create significant revenue.”
Kanabo shares are currently up 2.65% at 15.5p.
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