Khiron Life Sciences (TSXV: KHRN) (OTCQB: KHRNF) has entered into a non-binding letter of agreement to acquire 100% of the outstanding securities of Canapalife S.r.l. and a 100% stake interest in Campodoro S.r.l. – collective Canapalife Group – from shareholders Alvaro Garro and Paolo Puggioni.
Khiron Seeking Opportunities in Europe
Canapalife is a prominent hemp product company based in Italy with licenses for the cultivation, research, production and marketing of hemp-based products.
The company operates a cultivation site in Padua, near Venice, Italy, and conducts research in partnership with prominent universities and has registered three CBD consumer brands, including, Bloom CBD e-liquids, Canvax nutraceutical products and Legal Seeds, a brand designed to market EU approved seeds to the consumer market.
Italy represents the fourth largest economy in Europe and is the second largest cannabis market in Europe, with a projected medical cannabis market value of €7.5 Billion by 2028.
“The proposed transaction offers Khiron an entry to the European market and expansion of our global footprint. In addition to increasing our multi-jurisdiction cultivation and production capacity, Canapalife offers the addition of dynamic brands to our product portfolio, access to key retailer partners and relationships with Italy’s leading research facilities,” Khiron CEO and Director Alvaro Torres said in a statement.
Mr. Garro and Mr. Puggioni are the sole shareholders of Canapalife Group. Upon completion of the acquisition, they are expected to continue working as key employees with Khiron. The deal is expected to close in the second quarter of this year.
As consideration for the acquisition of Canapalife Group, Khiron will issue such number of common shares as is equal to C$10.50 million at a deemed price per share equal to the trailing 20-day volume weighted average closing price of its common shares on the TSX Venture Exchange.
An earn out of additional common shares for up to C$4,50 million, will be payable by Khiron to the shareholders over the course of two years, subject to Canapalife Group attaining certain revenue milestones.
Hillcrest Merchant Partners acted as advisor on the agreement, Khiron said, noting that completion of the transaction is subject to the execution of a definitive agreement and receipt of all required regulatory approvals, including final acceptance of the TSXV.