No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Seed Innovations reported on Wednesday that its portfolio company, Little Green Pharma (LGP), has completed the acquisition of Health House, a medicinal cannabis distribution business in Australia.
The AIM-traded firm said the acquisition would strengthen LGP's vertical integration, and aligned with its long-term expansion strategy amid the restructuring of the Australian medicinal cannabis industry.
Health House, a long-standing distribution partner of LGP, generates about $7.5m in annual revenue and has reached cash flow breakeven.
The deal involved a net cash payment of around $0.38m, with LGP also assuming an estimated $0.35m in net liabilities, excluding existing payables owed to LGP.
Seed highlighted the value of the acquisition, noting that Health House's parent company, Melodiol Global Health had previously listed the business for sale at $10.9m last September.
Seed holds 7,324,796 ordinary shares in LGP, representing approximately 2.4% of the company's issued share capital.
"LGP's acquisition of Health House strengthens its position in the rapidly growing Australian medicinal cannabis market by enhancing its distribution capabilities and reinforcing its vertical integration strategy," said Seed's director of investment research, Alfredo Pascual.
"This move comes amid ongoing industry consolidation and allows LGP to secure a key distribution partner at an attractive valuation, demonstrating its ability to execute disciplined, value-accretive growth.
"We are confident that this acquisition will create long-term value for both LGP and SEED shareholders."
At 0935 GMT, shares in Seed Innovations were down 8.57% at 1.6p.
Reporting by Josh White for Sharecast.com.
The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.