Agraflora Organics to Make Takeover Bid for Eviana Health

Agraflora Organics (CSE: AGRA) announced yesterday evening that it intends to launch a takeover bid for that of Eviana Health Corporation (CSE: EHC), citing a strong rationale for the transaction to occur. Eviana Health is currently focused on hemp operations, with a license to cultivate the crop in Serbia.

Within the press release, it is indicated that Agraflora Organics management presented an offer to the Board of Directors of Eviana on July 26 for a proposed merger between the two entities. While they haven’t received a response from management in the time since, the firm elected to move forward with its acquisition attempt by expressing the offer directly to shareholders.

Offering $0.50 per common share, Agraflora has made an offer that is currently a 49.25% premium to the current stock price of Eviana as per the news release. Based on the closing price of Agraflora shares on Friday of $0.295, this would result in Eviana shareholders acquiring 1.694915 Agraflora shares for each Eviana share held.

Agraflora released a preliminary outline of the benefits to Eviana shareholders if they choose to accept the offer, including but not limited to the following.

  • Significant and immediate 49.25% premium to market price;
  • Ownership in a larger cannabis entity with higher trading volumes and poised for further growth;
  • Opportunity to put in place proven management to execute the business plan; and,
  • Potential for further downward share price impact if the Offer is not accepted.

The firm also outlined for Agraflora shareholders why the transaction has merit, and what benefits the proposed merger would provide for the current operations of the firm, which includes:

  • 130 hectares of high-quality organic CBD from industrial hemp;
  • Strategic access to the European market;
  • Synergies with current AgraFlora products and brands for Eviana;
  • 40,000 sq. ft. processing facility in Mladenovo, Serbia (near Novi Sad); and,
  • Fully-funded 22,000 sq. ft. pharma-grade leased extraction facility in Belgrade with Vitalis
  • Supercritical C02 Extraction System

Agraflora Organics identified that there is currently no related parties between the two firms, and that it intends to present to Eviana shareholders further indepth rationale for the transaction in the coming days.

It should also be noted that such a combination would potentially result in Organigram Holdings (TSXV: OGI) becoming a minority shareholder in that of Agraflora Organics. The firm invested $5 million into Eviana last October via convertible debentures, citing the European potential of the firm. At the time, it resulted in Organigram obtaining a 21.44% stake in the firm on a partially diluted basis should the debentures be converted. However, with a conversion price of $1.15 per share, it is unlikely that the debt will be converted to equity when the debenture is due in October 2020.


FULL DISCLOSURE: Agraflora Organics is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Agraflora Organics on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.

Jay

As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive's stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.

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