Thoughtful Brands Inc (CSE:TBI) (OTCQB:PEMTF) (FWB:1WZ1:GR) reported that it has entered into a binding letter of intent (LOI) with European medical cannabis company Franchise Cannabis Corp, in which Franchise Cannabis will go public through a reverse takeover involving Thoughtful Brands and begin trading on the Canadian Securities Exchange under the name "Franchise Cannabis Corp."
Thoughtful Brands said it expects the combined company to be well positioned to expand product offerings and distribution channels in both the US and Europe, with the possibility of entering other cannabis markets as well.
"Over the past year we have built a strong relationship with the management team of Franchise as we have worked on the European joint venture for expanding our CBD eCommerce business. We have complementary expertise and both Thoughtful Brands and Franchise share a mutual commitment to delivering high-quality products with a superior customer experience to distinguish us in the marketplace," said Thoughtful Brands CEO Ryan Hoggan in a statement.
He added: “We look forward to working with Franchise to combine our core competencies and drive growth within the US and Europe.”
Franchise Cannabis CEO Clifford Starke also weighed in on the pending transaction, stating: “Becoming a public company will give us increased visibility and access to capital which in turn will allow us to execute on our long-term strategy of continuing to develop our European medical cannabis and genetics businesses. Since inception, we have built a portfolio of competencies with our genetics, cultivation, distribution, and now we feel poised to firmly establish our global footprint in the sector.
“We also intend to act on opportunities to scale both our pharmaceutical distribution capabilities and cannabis businesses, as well as potentially enter the US adult market,” he added.
“Our combination with Thoughtful Brands accelerates our vision to have a presence within the United States, while giving us the opportunity to leverage their eCommerce expertise and consumer products portfolio within the growing European market.”
Under the terms of the LOI, Thoughtful Brands will consolidate its outstanding shares on a 50-for-1 basis and will issue 78.4 million post-Consolidation common shares to the existing shareholders of Franchise Cannabis, valuing Franchise Cannabis at approximately $196 million.
It is anticipated that current Thoughtful Brands shareholders will hold approximately 10% of the merged company following completion of the transaction, with the balance held by current Franchise Cannabis shareholders and subscribers in the financing conducted concurrently with the transaction.
The combined company, through its operating subsidiaries, will have two German medical cannabis distribution businesses, a registered cannabis genetics subsidiary in Denmark, cultivation and strategic supply agreements on three continents, as well as a rapidly growing pharmaceutical distribution business with sales to over 18 countries combined with a high-revenue CBD eCommerce platform. It will also have a US-based CBD extraction facility.
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