AusCann and CannPal Enter Into Scheme of Arrangement
Perth, Nov 16, 2020 AEST (ABN Newswire) - AusCann Group Holdings Ltd (
ASX:AC8), an Australian based pharmaceutical company focused on the development, production and distribution of cannabinoid-based medicines within Australia and internationally, is pleased to announce that it has entered into a scheme implementation deed (SID) with CannPal Animal Therapeutics Limited (ASX:CP1) (CannPal) under which AusCann will acquire 100% of the issued share capital of CannPal under a scheme of arrangement (Transaction and Scheme).
The terms of the Scheme provide that CannPal shareholders will be offered 1.3 new fully paid ordinary shares in AusCann for every fully paid ordinary share in CannPal (Offer), valuing each CannPal share at $0.184 per share and CannPal at approximately $17.5 million on a fully diluted basis. The Scheme is subject to customary conditions, including CannPal shareholder approval and court approvals in accordance with the requirements of Part 5.1 of the Corporations Act 2001 (Cth).
AusCann believes that the combination of these two complementary businesses presents an attractive opportunity for both CannPal and AusCann shareholders due to the strengthened leadership, opportunity to leverage research, technology and know-how across human and animal health, strengthened financial position and economies of scale that better position the merged group to generate long-term sustainable growth.
The Offer represents compelling value for CannPal shareholders:
- 47.2% premium to CannPal's last close of $0.125 per share;
- 54.0% premium to CannPal's one-week VWAP of $0.1195 per share; and
- 54.6% premium to CannPal's one-month VWAP of $0.1190 per share.
Transaction rationale
The Transaction is expected to create:
- an expanded and complementary product portfolio and pipeline across both human and animal health comprising 2 products in market, 2 products expected to be launched within 12 months and beyond this a medium term pipeline of both Animal and Human products being researched and developed against specific unmet needs;
- an expanded geographical footprint across the US, Australia, MEA, Germany and other key markets;
- a strengthened and complementary R&D capabilities;
- a significant combined balance sheet, infrastructure and existing AusCann R&D facility to accelerate development and commercialisation of both companies' pipelines and market penetration of existing products;
- opportunities to extract synergies through shared R&D, staff and administration, intellectual property, and procurement synergies;
- a strengthened and expanded leadership team; and
- a larger ASX-listed company with enhanced liquidity, better placed to attract strategic and institutional investors, pursue growth opportunities and increase shareholder value.
CannPal Chairman, Geoff Starr, said: "There is a great logic to combining Cannpal Animal Therapeutics Ltd with AusCann Group Holdings Ltd with the new business having enhanced capability to exercise the potential for new and stronger commercial pathways. The synergies around local and overseas market knowledge and research and development know-how will enable faster to market solutions. It represents a unique and compelling value proposition for both companies."
AusCann Chairman, Max Johnston, added: "The combined business is expected to have the financial resources and technical expertise to accelerate the growth, commercialisation and market penetration of its pipeline products in Australia and offshore. The complementary nature of developing new health solutions for both human and animal and creating a much larger addressable market makes this combination a game changer for both companies. The combined resources position the new company well to take a leadership position within this new health industry sector"
Unanimous recommendation of CannPal board
The board of CannPal unanimously recommends that CannPal shareholders vote in favour of the Scheme at the scheme meeting, in the absence of a superior proposal and subject to the independent expert to be retained by CannPal concluding that the Scheme is in the best interest of CannPal shareholders. Each Director of CannPal intends to vote in favour of the Scheme in respect of all the CannPal shares controlled or held by or on behalf of that Director, subject to those same qualifications.
Voting Intention and Escrow of CannPal's largest shareholder, Merchant Opportunities Fund The Trust Company (Australia) Limited as custodian for the Merchant Opportunities Fund which is CannPal's largest and a founding shareholder, holding 19.88% of CannPal's shares, is supportive of the Scheme and has indicated to Cannpal its intention to vote all of its CannPal shares in favour of the Scheme, in the absence of a superior proposal and subject to the independent expert concluding that the Scheme is in the best interest of CannPal.
Additionally, the Merchant Opportunities Fund has agreed to escrow for 12 months all AusCann shares it receives on implementation of the Scheme.
Customary terms
The Scheme is not subject to finance and is subject only to conditions and provisions customary for transactions of this type, including exclusivity arrangements (with relevant fiduciary carve outs) and provisions for payment of reciprocal break fees of $150,000 in certain circumstances, no material adverse change, court approval, FIRB approval (if required) and the requisite shareholder approvals.
A copy of the SID (excluding certain schedules) is available at the link below.
Indicative Timetable
An explanatory booklet containing information relating to the proposed acquisition, reasons for CannPal directors' recommendation, an independent expert's report and details of the scheme meeting and timetable will be prepared and is expected to be dispatched to CannPal shareholders in January 2021.
CannPal shareholders will then have the opportunity to vote on the Scheme at a Court convened shareholder meeting. Subject to shareholder approval being obtained and the other conditions of the Scheme being satisfied or waived, the Scheme is expected to be implemented in March 2020.
AusCann is being advised by Kidder Williams Ltd as financial adviser and MinterEllison as legal adviser.
This announcement lifts the previous trading halt requested by AusCann with immediate effect, with shares in AusCann recommencing trading from the commencement of trading today.
To view the Scheme Implementation Deed, please visit:
https://abnnewswire.net/lnk/QM4ZCA33
About Auscann Group Holdings Ltd
AusCann Group Holdings Limited (ASX: AC8) is an Australian-based pharmaceutical company focused on the development, production, and distribution of cannabinoid-based medicines within Australia and internationally.
AusCann transforms the way medicinal cannabis is dispensed today by making standardised, controlled dose products, providing educational support to healthcare professionals and generating clinical evidence that is accessible to patients, physicians and healthcare providers. AusCann is developing a pipeline of proprietary differentiated cannabinoid-based pharmaceutical products. The Company's first product was successfully launched in Australia in 2020 and is available under special access provisions for medicines.
About CannPal Animal Therapeutics Limited
CannPal Animal Therapeutics Limited (ASX:CP1) is a listed animal health company developing innovative and naturally derived plant-based therapeutic products for pets targeting the endocannabinoid system that owners can trust are both safe and scientifically validated.
The company has a research focus on cannabinoids, the active pharmaceutical ingredients extracted from the cannabis plant, to provide veterinarians and pet owners with clinically validated and standardised therapeutics to treat animals in a safe and ethical way.
CannPal has identified a significant opportunity to benefit from the rapidly growing medical cannabis and animal health markets by developing innovative therapeutics that can influence the endocannabinoid system with full regulatory approval for veterinary distribution.
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