Halo Collective Inc. (OTCQB:HCANF) (NEO:HALO) (Germany:A9KN) (France/Swiss ISIN: CA40638K5070) has signed a letter of intent and entered into exclusive negotiations to acquire Phytocann Holdings SA. The planned acquisition would add substantial revenue, EBITDA, geographic diversification and a CBD-based product lineup to Halo when closed.
Halo is proposing to acquire Phytocann through a wholly owned subsidiary to be formed by Halo, in Ontario, Canada; Phytocann International Holdings. PIH is the planned vehicle for all of Halo's remaining non-THC assets anchored by Phytocann.
Alexandre-Henri Lacarré, the founder of Phytocann, is expected to lead PIH as its CEO upon closing of planned acquisition.
Phytocann's audited 2020 revenue and earnings before taxes, depreciation, and amortization ("EBITDA") were approximately €5.3 million ($5.56 million) and €1.2 million, respectively, for the twelve-month period ended December 31, 2020. Phytocann is expected publish audited numbers for the period ended December 31, 2021 within the next 90 days.
After the planned acquisition is completed, Phytocann's management projects net revenues and EBITDA of approximately €17 million and €4.3 million, respectively, for the first twelve-month period.
Following the acquisition of Phytocann, Halo management is expecting to create two separate companies under Halo Collective, a THC focused entity, and a non-THC focused entity:
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Phytocann International Holdings: Phytocann and the remaining non-THC assets of Halo's are expected to be combined to establish a multi-national wellness platform consisting of a range of non-THC products that will be headquartered in Switzerland.
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Halo Collective Cannabis Holdings: is expected to be established as a pure-play cannabis operation focused on the west coast of North America, with cultivation, extraction, manufacturing, distribution, and retail operations in California and Oregon. The business would have a singular focus on enhancing the growth and profitability of Halo's vertically integrated THC businesses, headquartered in Canada.
Halo is expecting to form PIH under the laws of Ontario, Canada, and to transfer all CBD beverages, candy, dissolve strips, U.S. distribution agreements, and any other non-THC product assets of Halo to PIH, subject to Phytocann's approval and due diligence. As a result, PIH will be 100% held by Halo. PIH would then acquire 100% of the business and assets held directly or indirectly by Phytocann.
Under the terms of the LOI, Halo is offering upfront consideration of €12.2 million, with a further potential earn-out of up to €87.8 million in debt.
Halo expects to complete the Planned Acquisition in the next 90 days.
Photo: Courtesy of CNW Group/Halo Collective Inc.
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