MediPharm Labs to acquire Vivo Cannabis in all-stock Canadian deal

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MediPharm Labs is acquiring Vivo Cannabis in an all-stock deal, marking the latest consolidation move in the Canadian marijuana industry.

The acquisition is “expected to combine complementary strengths of diversified revenue in multiple markets and channels,” the companies said in a Thursday news release.

The combined business would have more than 50 million Canadian dollars ($36.6 million) in annualized revenue based on both companies’ third-quarter performance and combined cash of about CA$30 million.

When the acquisition is complete, MediPharm shareholders will own 65%-79% of the combined company, with Vivo shareholders owning 21%-35%, depending on how much interim working capital Vivo has at closing.

Barrie, Ontario-based MediPharm and Toronto-headquartered Vivo said the combined company will have “Canadian market coverage with cultivation and manufacturing expertise, and a full suite of dried flower and derivative products with both established medical and adult-use wellness distribution channels.”

The combined company would also have annualized international medical cannabis revenue worth more than CA$20 million, based on third-quarter results.

The companies expect “to find positive (earnings before interest, taxes, depreciation, and amortization) synergies to the magnitude of between $7M to $9M on an annualized basis, and could reach positive EBITDA and cash flow in the first half of 2024,” according to the release.

The transaction is subject to shareholder approvals as well as court, regulatory and stock exchange approvals and is expected to close in the first half of 2023.

MediPharm shares trade as LABS and Vivo shares trade as VIVO on the Toronto Stock Exchange.