Westleaf Inc (TSXV: WL) issued a news release late last night, revealing that firm will be merging with that of We Grow BC, the company behind the popular Qwest cannabis product line. The combination will result in a fully vertical cannabis firm, with operations spanning legal cultivation, processing, and retail.
The combination will see We Grow BC’s well known Qwest brand increase its annual production to approximately 9,100 kilograms per annum, upon the final licensing of Westleaf’s Saskatchewan-based cultivation facility. The aim of the combined firm is to establish a “craft-at-scale” ultra-premium product offering through that of the Qwest brand.
Under the terms of the definitive agreement, We Grow BC shareholders will receive 4.264 Westleaf shares for each We Grow BC share held. However, it is unclear just how many shares are currently outstanding for We Grow, and no valuation was placed on the merger transaction, thus making it difficult for current Westleaf shareholders to determine whether or not the terms are favourable. The arrangement is also contingent on We Grow BC raising $3.0 million through a private placement of subscription receipts at a price of $0.30 per share. Those subscription receipts will transfer into Westleaf shares one a one for one basis, with an additional half warrant at $0.38 being included.
This transaction brings together a known brand with revenue and EBITDA to complement some of Canada’s most premier indoor cultivation and extraction facilities. Together, we will be able to aggressively expand a trusted brand, increase market share, drive revenue and EBITDA growth and become an extremely competitive company in Canada and beyond.Scott Hurd, President and Chief Executive Officer of Westleaf
The resulting firm will see a board of directors that is split between Westleaf and We Grow BC directors, and the current CEO of We Grow, Benjamin Sze, will become the Chief Executive of the resulting issuer. Current CEO Scott Hurd will become President.
The arrangement is expected to close by mid-December, subject to approval from We Grow BC and Westleaf shareholders.
Westleaf Inc closed yesterdays session at $0.30 on the TSX Venture.
Information for this analysis was found via Sedar and Westleaf Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
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.