Mr. Hadley Ford of iAnthus reports
IANTHUS AND MPX BIOCEUTICAL ANNOUNCE TRANSFORMATIONAL COMBINATION, EXPANDS U.S. FOOTPRINT TO 10 STATES
iAnthus Capital Holdings Inc. and MPX Bioceutical Corp. have signed an arrangement agreement, pursuant to which iAnthus will combine with MPX in an all-stock transaction with offered equity consideration to MPX shareholders valued at $835-million before giving effect to MPX International (defined herein) and assuming all of MPX's dilutive securities are exercised prior to the completion of the transaction. The agreement represents the first public-to-public merger transaction in U.S. cannabis history.
The agreement provides that MPX shareholders will be entitled to receive 0.1673 common share of iAnthus for each common share of MPX held, representing a consideration of approximately $1.28 per MPX common share, a premium of 30.6 per cent based on the closing price of iAnthus and MPX common shares on Oct. 17, 2018. In addition, each MPX shareholder will receive common shares of the newly formed MPX International, which will hold all of the non-U.S. businesses of MPX. MPX International will apply to list on the Canadian Securities Exchange with the listing to occur contemporaneously with closing of the transaction. All references to currency are in Canadian dollars.
The combined company, excluding MPX International, will encompass operations and cannabis licences in 10 states that will permit iAnthus to operate 56 retail locations and 14 cultivation/processing facilities. As a result of the transaction, iAnthus will add retail and/or production capabilities in Arizona, Maryland, Nevada, California and Massachusetts. These additional licences complement iAnthus's existing assets in New York, Florida, Massachusetts, Vermont, Colorado and New Mexico, forming superregional footprints in both the eastern and western United States.
The 10 states combined are projected to generate approximately $16.2-billion in yearly cannabis sales by 2022, according to Arcview Market Research and BDS Analytics.
"This is a watershed moment for iAnthus as we nearly double the size of our national footprint in the United States. iAnthus will be uniquely positioned for success on the U.S. East Coast while solidifying our cultivation and retail presence with the additions of California, Nevada, Maryland and Arizona," said Hadley Ford, chief executive officer of iAnthus. "Since its inception, iAnthus has been strategically focused on building scale, and this announcement crystallizes our positioning as one of the largest multistate operators in North America."
MPX is a vertically integrated, multistate cannabis operation that provides management, staffing, procurement, advisory, financial, real estate rental, logistics and administrative services to medicinal cannabis enterprises across its holdings in five states.
"MPX is committed to providing the strongest value possible to our shareholders, and we feel that working with a best-in-class operator like iAnthus provides us with the best opportunity to achieve that goal," said Scott Boyes, chief executive officer of MPX. "The nascent U.S. cannabis market is still in a land-grab phase, and we feel that our footprint, when combined with iAnthus, provides our investors with the strongest possible exposure to this explosive marketplace."
Licensed facilities iAnthus MPX Combined
States Florida, New York, Nevada, Arizona, 10
Massachusetts, Vermont, Massachusetts,
New Mexico and Colorado Maryland and
Retail 46 10 56
Cultivation and production 8 6 14
September, 2018, revenue
(unaudited) ~$0.9M ~$6.0M ~$6.9M
"The U.S. cannabis market depends on three key factors for success: scale, access to capital and great people to make it all work," said Mr. Ford. "This acquisition improves our position in all three. We are especially thrilled to have Beth Stavola, an early pioneer and visionary in the industry, join our board and senior leadership."
"The ability for the combined company to sell products across 10 states with an addressable market of 112 million people, combined with the shared management philosophy of driving best practices across all our operations, was key to my excitement about joining forces," said Beth Stavola, chief operations officer of MPX, who will become chief strategy officer and a director of the resulting company. "The opportunity in front of us is enormous."
Directors and officers of iAnthus and MPX have entered into support agreements pursuant to which they have agreed to vote their shares in favour of the agreement. Upon completion of the transaction, the board of directors of the combined company will be increased to seven directors, with three directors being nominated by MPX.
The agreement provides that MPX is subject to non-solicitation provisions and provides that the special committee of MPX may, under certain circumstances, terminate the arrangement in favour of an unsolicited superior proposal, subject to a termination fee of $25-million to iAnthus and subject to a right to match the superior proposal.
The agreement will be carried out by way of plan of arrangement under the Business Corporations Act (British Columbia) and will require the approval of at least 66-2/3rds per cent of the votes cast by MPX shareholders at a special meeting expected to take place in January, 2019.
Closing remains subject to approval of the shareholders of MPX, court approval, the approval of the CSE, applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature.
Further information regarding the transaction will be included in the information circular MPX will prepare, file and mail in due course to its shareholders in connection with MPX's special meetings to be held to consider the agreement. The agreement will be filed on the SEDAR profiles of iAnthus and MPX on SEDAR.
The boards of directors of both iAnthus and MPX have unanimously approved the transaction and the MPX board of directors unanimously recommends that MPX shareholders vote in favour of the transaction. The board of directors of MPX has acted on the unanimous recommendation of the special committee comprising solely independent directors. GMP Securities LP provided a fairness opinion to the board of directors of iAnthus, stating that, in its opinion and based upon and subject to the assumptions, limitations and qualifications set forth therein, the exchange ratio pursuant to the agreement is fair, from a financial point of view, to the iAnthus. Echelon Wealth Partners Inc. has provided a fairness opinion to the special committee of the board of directors of MPX, stating that, in its opinion and based upon and subject to the assumptions, limitations and qualifications set forth therein, the exchange ratio pursuant to the agreement is fair, from a financial point of view, to the MPX shareholders.
Financial and legal advisers
GMP is acting as the exclusive financial adviser to iAnthus with McMillan LLP acting as legal counsel to the company.
Echelon is acting as the exclusive financial adviser to the special committee of the board of directors of MPX.
Conference call information
iAnthus and MPX will host a joint conference call to discuss the transaction on Oct. 18, 2018, at 9 a.m. ET. A copy of the presentation can be found on iAnthus's website.
Toll-free dial-in number: 888-231-8191
International dial-in number: 647-427-7450
Conference ID: 9798265
A replay of the call will be accessible by telephone until 11:59 p.m. ET on Oct. 25, 2018.
Toll-free dial-in number: 855-859-2056
Replay password: 9798265
About iAnthus Capital Holdings Inc.
iAnthus Capital Holdings owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughout the United States, providing investors diversified exposure to the U.S. regulated cannabis industry.
About MPX Bioceutical Corp.
MPX, through its wholly owned subsidiaries in the United States, provides substantial management, staffing, procurement, advisory, financial, real estate rental, logistics and administrative services to three medicinal cannabis enterprises in Arizona operating under the Health for Life (dispensaries) and the award-winning Melting Point Extracts (high-margin concentrates wholesale) brands.
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