The consolidation in the cannabis industry continues as companies not just in the United States are making deals. Canada-based Aleafia Health ALEAF announced the acquisition of peer Emblem Corp EMMBF in an all-stock transaction.
What Happened
Aleafia Health said the value of the deal is C$173.2 million ($128.9 million). The company will give 0.8377 shares per each share of Emblem, which represents C$1.21 per Emblem share and a premium of 27 percent based on the closing prices of Aleafia and Emblem on the TSX Venture Exchange on Dec. 18.
After the deal is completed, Aleafia shareholders will control 59 percent of the combined company, while Emblem stockholders will keep the other 41 percent.
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Why It's Important
"Emblem's patient-focused product portfolio and strength in patient education, conversion and retention through GrowWise will be further bolstered by the patient acquisition capabilities of Aleafia's Canabo clinics," Emblem CEO Nick Dean said in a press release.
Despite the fact that Canada officially legalized marijuana two months ago, many issues remain across the country, mainly in the forms of supply shortages and bottlenecks, which many blame on the government. Joining forces in this environment could help cannabis companies weather through the current situation, while also ramping up their footprint as cannabis becomes more widely available across the country.
What's Next
Aleafia and Emblem expect that their combination will create one of the leaders in the Canadian marijuana space. The new company will have the largest national clinic network, with 40 locations across the country. In addition, the combination will allow both companies to grow 138,000 kilograms of marijuana per year.
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