Flora Growth Corp. (NASDAQ:FLGC) has entered into a definitive agreement to acquire all of the issued and outstanding shares of Germany-based TruHC Pharma GmbH.
The company's latest move to further cement its global footprint comes on the heels of a new German cannabis law that went into effect on April 1, which partially legalizes cannabis by allowing adults over 18 to possess up to 25 grams of dried cannabis and grow three marijuana plants at home.
Flora Growth, through its wholly-owned subsidiaries, has been active in Germany since 2017. Other companies, like Aurora Cannabis, Inc (NASDAQ:ACB) (TSX:ACB), Tilray Brands, Inc. (NASDAQ:TLRY) and Curaleaf Holdings Inc. (CSE:CURA) (OTCQX:CURLF) also ventured into the new market. Dr. Constantin von der Groeben, a managing director of Demecan – the only German vertically integrated medicinal cannabis company – told the crowd gathered at the Benzinga Cannabis Capital Conference on Tuesday that "There's no stepping back" from Germany's cannabis legalization.
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See also: Huge Benefits For Medical Marijuana Patients, Opportunities For Innovation & Research – Industry Vets Weigh In On Germany's Cannabis Reform
Meanwhile, Flora Growth's acquisition deal combines the company's extensive global CPG and pharmaceutical distribution network with TruHC's deep global cannabis expertise, including an executive team that has been building medical and recreational cannabis companies across Germany, Canada, and the United States.
As previously announced, Flora agreed to purchase TruHC Pharma GmbH in an all-stock deal in exchange for 2,770,562 of its common shares, valued at $6.4 million.
The purchase price will be paid and satisfied by Flora in two closings. At the first closing, which is expected to occur by the end of April 2024, Flora will issue 2,135,199 of its shares, which is equal to 19.99% of the company's issued and outstanding common shares. On the second closing and upon shareholder approval of the issuance, Flora will issue 635,363 of its shares.
The acquisition capitalizes on TruHC's leading German cannabis platform, including:
- EU-GMP processing and production license
- GDP wholesale license for import/export
- EU-GMP-certified customizable modules with flexibility to incorporate various production/packaging processes and which enable license extension for future in-country cultivation and supply to cannabis dispensaries
- Narcotics license with EU-GMP-certified storage
- EU-GMP-certified laboratory for instant cannabis analysis
"Now that Germany has rolled out its blueprint for recreational legalization, we intend to capitalize on the opportunity and work together to become the cannabis leader in the country," Hendrik Knopp, CEO of TruHC, said.
Now read: This Cannabis Pioneer Is Ramping Up Its Presence In Germany As Weed Legalization Takes Effect
FLGC Price Action
Flora Growth's shares traded 2.75% lower at $1.77 per share at the time of writing on Wednesday mid-morning.