Creso Pharma (ASX: CPH) this morning announced that it is set to merge with that of Red Light Holland (CSE: TRIP) in an arrangement that is set to create a global psychedelics and cannabinoid company. The arrangement will see the formation of The HighBrid Lab, in a transaction that will bring Creso to the Canadian Securities Exchange.
The merged entity, as per the news release issued this morning, is expected to have a pro-forma equity value of $347 million with a cash balance of roughly C$45 million.
The firm is expected to focus on expanding market and brand leadership in recreational psilocybin, while supporting science and innovation in the psychedelics space. In terms of cannabis, the firm is to focus on scaling its current recreational offerings to improve its market share within Canada, while also focusing on the introduction of its products to US markets. Here, the company is said to be focused on US cannabis acquisitions “in the near term.”
“Having worked with both the Creso Pharma and Red Light Holland teams closely in the past, I am really excited by the potential this combination brings. As a merged company, The HighBrid Lab has access to four of the highest growth industry segments around, and the team, board and advisory group to make real progress within these verticals. I’m really looking forward to rolling up my sleeves and helping The HighBrid Lab get to work!”
Bruce Linton
The transaction will effectively see Creso conduct a reverse takeover of Red Light Holland, based on a premium of 29.9%. Shareholders of Creso are to receive 0.395 of a Red Light Holland share for each share of Creso held. Holders of listed Creso options meanwhile will receive 0.257 of a Red Light Holland share for each option held. Upon closing, it is expected that the resulting company will consist 57.4% of Creso shareholders, with the remaining portion of the company held by Red Light Holland shareholders.
Post-transaction, the resulting issuer is to see Todd Shapiro lead the company as CEO and a director, while Bruce Linton will serve as non-executive chairman of the company. Creso is to appoint three directors to the resulting seven-person board as well.
The transaction is expected to close in the third quarter of 2021.
Red Light Holland last traded at $0.34 on the CSE.
FULL DISCLOSURE: Creso Pharma is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Creso Pharma 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.
