By Dipo Olowookere
Global cannabis company, Invictus has entered into an agreement with GTEC Holdings Ltd for the acquisition of all of the issued and outstanding shares in the capital of GTEC in an all-share transaction valued at approximately $100 million, forming Western Canada’s largest indoor vertically integrated cannabis companies.
Under the terms of the proposed transaction, which will be completed by way of a plan of arrangement, holders of GTEC common shares will receive approximately 40 percent of the issued and outstanding shares of Invictus post-closing.
Concurrently with the closing of the Transaction, the holders of options and warrants in the capital of GTEC will receive a proportionate number of options and warrants of Invictus.
Assuming completion of the transaction, the issuance of Invictus shares to the current GTEC shareholders represents an approximate 25 percent premium to the 30-day volume weighted average trading price of the common shares of both GTEC and Invictus on the TSX Venture Exchange (TSXV) as of November 15, 2018.
The combined entities would provide a robust vertically integrated cannabis company, focused on producing premium flower and complementary product portfolio, cultivated in purpose-built indoor facilities complemented with superior genetics.
For the six months ended July 31, 2018, Invictus generated unaudited revenue and EBITDA of $1.8 million and $9.3 million, respectively. Invictus had $10.7 million in cash as at July 31, 2018. For the nine months ended August 31, 2018, GTEC had no revenue and unaudited EBITDA of $7.2 million. GTEC had $4.4 million in cash as at August 31, 2018.
“As we now see the cannabis industry shift into non-medical use in Canada, and further medical markets expanding globally, this merger is synergistic and complementary. Combined, we offer a much stronger team with aligned visions on executing a pathway to become a global leader within the cannabis industry” said Norton Singhavon, Chairman and CEO of GTEC.
“We have been pleased with the continued execution of the team and business strategy at GTEC,” said George E. Kveton, CEO of Invictus. “The dedication to producing a premium product medical and adult-use recreational portfolio for the industry has always been our relentless pursuit. This merger allows for both companies to leverage the combined core competencies to further execute our vision to be at the forefront of the Canadian cannabis industry and beyond”
The transaction will require approval by at least 66 2/3 percent of the votes cast by shareholders of GTEC at a special meeting of the shareholders of GTEC. It is anticipated that the Directors, Officers and insiders of GTEC and Invictus will enter into support agreements pursuant to which they will agree to vote their shares in favour of the transaction.
The transaction will be effected by way of a plan of arrangement completed under the Business Corporations Act (British Columbia). The transaction remains subject to board approval of both parties, shareholder approval, regulatory approval from the TSXV and court approval, as applicable. The agreement remains subject to approval of the board of Invictus.
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