- Phivida (CSE:VIDA) has agreed to be acquired by fellow cannabis company Choom (CSE:CHOO), in a share deal valued at approximately C$7.3 million
- Choom will acquire all issued and outstanding common shares in Phivida, in exchange for common shares in Choom
- Choom hopes the acquisition will accelerate its growth in Canada’s retail cannabis sector
- Phivida (VIDA) is down 5.88 per cent and is currently trading at eight cents per share
- Choom (CHOO) remains unchanged and is currently trading at 14 cents per share
Phivida (CSE:VIDA) has agreed to be acquired by fellow cannabis company Choom (CSE:CHOO), in a share deal valued at approximately C$7.3 million.
Under the definitive agreement, Choom will acquire all of the issued and outstanding common shares in Phivida. In exchange for each share, Choom will issue Phivida shareholders 0.72566 of a common share in Choom.
Based on the closing price on June 2, the shares will be issued at a 20 per cent premium.
The transaction will require approval from at least 66 per cent of Phivida’s shareholders, plus regulatory, court, and stock exchange approvals. It has already gained approval from the boards of directors from both companies.
When the transaction completes, Choom’s board of directors will reorganise. The new board will consist of three directors nominated by Choom, and one director nominated by Phivida.
The two companies will mutually agree upon a fifth director who will join the board.
Phivida’s CEO, David Moon, said the decision came after an extensive evaluation of Canada’s cannabis market.
“We’re thrilled to partner with Choom and continue to execute on our digital growth strategy, which will be complimentary to Choom’s brick-and-mortar retail store growth.
“By leveraging consumer data collected through our online websites and working with the Choom team to enhance in-store analytics, we are well-positioned to optimise our business for continued success,” he said.
The combination of the two companies’ assets is expected to boost Choom’s plans for expanding in Canada’s retail cannabis sector. In particular, it will strengthen Choom’s digital assets and accelerate its roll-out of additional stores in Ontario and British Columbia.
Choom’s CEO, Corey Gillon, discussed the benefits of Phivida’s amalgamation into the company.
“The acquisition of Phivida will further Choom’s ability to deliver on our business plans and accelerate our growth initiatives, enabling our omni-channel strategy through enhanced digital capabilities, and an expanded brick-and-mortar presence across Canada.
“The timing is ideal, as we prepare to expand our retail footprint in Ontario, Canada’s largest market for cannabis sales, later this year, and with several flagship locations already secured,” he said.
Phivida (VIDA) is down 5.88 per cent and trading at eight cents per share at 1:31pm EDT.
Choom (CHOO) remains unchanged and is currently trading at 14 cents per share at 1:33pm EDT.