California-based Vibe Bioscience Ltd. is set to acquire Cathedral Asset Holding Corporation and its cannabis distribution and manufacturing assets. Cathedral is a wholly-owned subsidiary of Ventura Cannabis and Wellness Corp.
Both companies are currently traded on the Canadian Securities Exchange, but Ventura Chairman Lloyd Kaplan said the firm would soon delist from the market.
“The Board has continually analyzed the current and future cannabis market, VCAN’s current and prospective financial position, and it has determined selling the Company’s assets to another CSE listed cannabis company and delisting is the best path forward for the Company and most importantly its shareholders. I am pleased to be trading our cannabis assets into a better capitalized company with more revenues and a top flight management team and, more importantly, the deal is poised to be done at a premium to our current stock price,” – Kaplan in a statement
Under the terms of the all-share transaction announced on Sunday, Vibe will acquire all the issued and outstanding shares of Cathedral for $333,360, assume the lease obligation for Cathedral’s Santa Rosa facility, and obtain the company’s existing inventory of vape products. Ventura will also receive 12 months at the money warrants to acquire up to 800,000 shares of Vibe.
The deal still requires approval from California regulators, and other closing conditions, but is expected to be finalized on September 15.
Mark Waldron, CEO of Vibe said the deal positions the company to be a “true, vertically integrated cannabis cultivator, distributor, manufacturer and retailer” in the state.
“Vibe is singularly focused on developing cannabis assets that are cash flow positive, and we anticipate the acquisition will be highly accretive to Vibe shareholders within 6 months, Waldron said in a statement. “We could not be more pleased with the strategic and geographic fit of adding Cathedral’s distribution and manufacturing assets to Vibe’s growing, profitable cannabis portfolio.”
During the second quarter, Vibe saw an 85 percent increase in revenues from the same period last year; a 136 percent adjusted EBITDA increase from the first quarter of this year – a 600 percent increase from Q2 2019; and a 39 percent gross margin increase from Q1 2020 to Q2, representing a 58 percent increase from last year.
All monetary figures in Canadian dollars