The projected outcome of this acquisition is a boost in operations and the initiation of collaborations in the country, which is a major zone in the growth strategy of Franchise Global Health.
Franchise Global has made this move to strengthen its hold in the category market.
In May, Franchise Global announced its intention to acquire the target company via entering a letter of intent. This letter highlights the conditions that Franchise Global will adhere to in order to acquire the distributing company. The decision-makers at Franchise Global are of the view that upon completion of the acquisition, their market share will increase significantly in a vital market that is Germany. The credit for this strong foothold in the market will go to the solidified infrastructure and operations of medical cannabis and pharmaceutical products.
Franchise Global CEO, Clifford Starke, believes that this improved position in the medical cannabis and pharmaceutical market will be achieved using the distributor’s vast experience in the market and furthermore open additional doors in terms of distribution channels and accessibility to medical stores that were unreachable for the company before. The CEO further added, “We expect it to be a solid addition to Franchise Global’s core position in Germany, advancing our business plan as Germany moves closer to full legalization of recreational cannabis.”
Providing multiple products to numerous top medicinal brands, the target company is one of the leading pharma distributors in the country.
Prior to this, Franchise Global had bought out another leading distributor of the same product category, Phatebo GmbH, which distributed the products in the European Union. The company is also of the view that it is an early mover in the market in Europe due to the fact that in 2017, it received the very first license to import and distribute medical cannabis in the country.
According to the CEO, they aim to lead the competition in the medical cannabis market in the country. “By merging Franchise Global’s experience with the Target Company’s market presence, we are well on our way to being one of the premier German pharmaceutical and medical cannabis companies”, added the CEO.
The terms of the letter of intent state that 100% of the distributor company, including the patents, trademarks, and copyrights used in its business will be acquired by Franchise Global for a total of €18,000,000, 85% of which will be in cash (expected to be paid using the financing initiatives proceeds) and 15% in ordinary shares of Franchise Global. An additional earn-out amount of a maximum €9,000,000 will be payable in ordinary shares, depending on the 2024 fiscal year performance of the distributor company. The issuance value of the shares will be the weighted average 10-day volume trading price before the issuance.
Once the parties reach an agreement, Franchise Global will issue a detailed news release that will include more details of the acquisition, starting with the identity of the distributor company. The acquisition is expected to close in the last three months of 2022.