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Monday, Feb 6, 2023
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


Flora Growth to acquire Franchise Global in a $42M transaction

The deal will help Flora establish a foothold in the German medical cannabis market

Flora Growth acquires Franchise Global in a $42M transaction
Photo via Flora Growth Corp.

Flora Growth Corp. (NASDAQ: FLGC) has signed a definitive agreement to acquire 100 per cent of Franchise Global Health (TSXV: FGH) in a transaction expected to help connect Flora’s Colombia-grown pot with the German medical cannabis market.

More specifically, the deal will enable Flora to distribute medical cannabis to approximately 1,200 pharmacies in Germany and generate even more revenue if the country takes additional steps toward legalizing adult-use recreational cannabis.

Additionally, it will provide Flora with FGH’s distribution network for pharmaceutical products established throughout 28 countries.

Read more: Greenrise sees 26% YoY Q1 revenue growth for its Germany-based subsidiary

Read more: Germany takes further steps towards adult-use cannabis legalization

The all-stock acquisition by Flora will inherently provide the company with Franchise subsidiaries such as Phatebo GmbH and ACA Müller ADAG Pharma Vertriebs GmbH.

“Through this proposed acquisition, we are connecting our commercial infrastructure and medical cannabis product portfolio to the German and European Union (EU) medical markets, while gaining direct access to European pharmaceutical distributions,” said Luis Merchan, CEO of Flora Growth.

“We believe Franchise will significantly increase our commercial international revenue and provide essential distribution to German pharmacies and a growing wholesale market.”

The acquisition will provide Flora with access to intellectual property and other knowledge from FGH including the “first registered cannabis seed bank” in Copenhagen, Denmark said to house 286 cultivars, and 41 Colombian strains.

The acquisition will also allow Flora to expand its CBD business reach throughout Europe by taking advantage of FGH’s logistics and distribution knowledge.

The companies say that the combination of Flora and FGH will provide a minimum of US$3 million in annual cost synergies within one year once the acquisition has been completed, mainly due to decreased corporate administrative costs.

“This is an opportune time to invest in the cannabis sector with significant upside ahead. We plan to work hard to gain market share in the growing German cannabis market as global policy turns the corner,” said Clifford Starke, CEO and executive chairman of FGH.

“This acquisition represents an accretive transaction for FGH by combining a strong pro-forma revenue profile with an attractive opportunity to execute on our core strategy of providing patients with highly sought-after medicinal cannabis.”


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