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Harvest One Cannabis acquires Delivra for CA$19M in all stock deal to strengthen its medical and wellness division

CEO Grant Froese says the addition of Delivera’s LivRelief will give Harvest One a head start for cannabis-infused products in Canada
A cannabis plant
Harvest One develops and provides lifestyle and wellness products for consumers and patients

Harvest One Cannabis Inc (CVE:HVT) (OTCQX:HRVOF) announced Monday that it has entered into a definitive agreement to acquire  Delivra Corp. (TSXV:DVA) for C$19 million in a stock deal to strengthen its medical and wellness division.

Under the terms of the arrangement, shareholders of Delivra will receive 0.595 common shares of Harvest One for each Delivra Share.

Based on the closing trading price of the Harvest One shares on the TSX-V on March 1, 2019, the implied value equates to approximately $0.39 per Delivra share, and represents a total equity consideration of approximately CA$19 million, said the company while discosing terms of the transaction.

Harvest One, which develops and provides lifestyle and wellness products for consumers and patients, has a robust balance sheet, with a cash balance of C$41 million as of Dec. 31, 2018. 

Shares of Harvest One were up 1.4% to US$0.52 in morning trading in New York, while Canadian-traded shares were flat at CA$0.66.

READ: Harvest One Cannabis sees second successive quarter of record growth

Harvest One's acquisition of Delivra furthers the company's health, wellness, and self-care strategy by adding LivRelief to its medical and wellness portfolio. Delivra’s LivRelief brand produces a variety of topicals and creams with existing distribution channels across Canada. This will position Harvest One well when cannabis-infused products are legalized in Canada around Fall of 2019.

"The acquisition of Delivra by Harvest One puts further emphasis on the Harvest One goal of being a leading house of brands in the global health, wellness, and self-care sector,” said Harvest One CEO Grant Froese. “The addition of LivRelief, which is already on retail shelves across Canada, will give Harvest One a head start for cannabis-infused products in Canada.”

Transaction rationale 

Delivra will immediately add to the revenue of Harvest One with its existing distribution into Shoppers Drug Mart, Walmart, Loblaw, Rexall, Pharmasave, London Drugs, and other major retailers in conjunction with Harvest One's existing distribution of Dream Water in 30,000 stores across North America

Froese said it is “a great addition” to the company’s existing brands in this space with Satipharm CBD GelPell capsules already on sale in Europe, and Dream Water, its natural sleep aid, available across North America.

Harvest One has initiated its product development strategy to produce oil-based derivative products, through its extraction agreement with Valens GroWorks Corp (CSE:VGW).

Subsidiary Satipharm, which develops cannabis-based health products, launched sales of its reformulated proprietary capsules online in the United Kingdom and in the European Union where local regulations allow. The company said brick and mortar distribution will be available shortly with Canadian distribution to follow.

READ: Harvest One Cannabis inks validation testing agreement with BLOCKStrain Technology

"We are very excited to welcome Dr Joseph Gabriele and the Delivra team into the Harvest One family and expanding our brand portfolio,” added Froese.

The addition of Dr Gabriele's expertise in pain relief R&D will be a major boost for Harvest One's in-house formulation and product development team.

"The transaction with Harvest One is an exciting and important step for our shareholders and is the result of an extensive strategic review process," said Delivera CEO Dr Joseph Gabriele. "Harvest One is a global leader in the cannabis space, focusing on innovative lifestyle and wellness products. Combined with our proprietary transdermal delivery system platform and extensive research, development and commercialization capabilities, the combined company is extremely well-positioned to take advantage of the growing market for topicals, sprays, beverages, and other cannabis/CBD-infused products."

He described it as "a value-maximizing transaction" that provides Delivera shareholders with "a significant premium and an exciting opportunity to participate in the upside of Harvest One."

The transaction is subject to the approval of the Ontario Superior Court of Justice and also requires the approval of two-thirds of the votes cast by Delivra shareholders at a special meeting to be convened in May, said the company.

At its Duncan, British Columbia and Lucky Lake, Saskatchewan facilities, expansion plans for Harvest One are on track as the company is targeting an annual run rate of 20,000 kg premium indoor grown flower by the end of December 2019. 

On Tuesday (March 5) Harvest One noted in a statement that investor MMJ Group Holdings Ltd, following the forecast completion of the Delivra acquisition, will own around 26% of  the group, down from around  30% previously.

-- (Updates with quotes from Delivera CEO Dr Joseph Gabriele) -- 

Contact Uttara Choudhury at [email protected]

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Harvest One Cannabis Inc Timeline

May 02 2019

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