TORONTO, Jan. 25, 2019 /CNW/ - Khiron Life Sciences Corp., an integrated medical cannabis company with its core operations in Latin America, announced today that the Company has entered into a binding letter agreement dated January 24, 2019 to acquire 100 percent of NettaGrowth International Inc., an arm's length party, which will own, at the time of completion of the transaction, all the outstanding shares of Dormul S.A. (doing business as Cannapur).
Dormul has obtained the first licence to produce medical cannabis with THC for commercialization in Uruguay. With this acquisition, Khiron will be able to significantly expand its cultivation capacity to a third jurisdiction, and through the Mercosur Regional Free Trade Bloc, will gain access to an export market of approximately 75 million people in Southern Brazil. As consideration for the acquisition of NettaGro, Khiron will issue 8,498,821 common shares to the shareholders of NettaGro, at a deemed price of $1.61 per common share.
Upon completion of the acquisition of NettaGrow, renowned Canadian entrepreneur Joseph Mimran will join the board of Khiron's Colombian operating subsidiary and will provide strategic counsel to Khiron on packaged goods and retail development for the Latin American market.
Michael Beck, an equity investor with extensive experience in venture capital, has agreed, subject to receipt of all required approvals, to join Khiron's board of directors following the completion of the transaction.
Uruguay was the first country to establish legislation for cannabis, and Dormul has secured a medical cannabis cultivation and commercialization licence for the jurisdiction, with a cultivation capacity of up to 120 tonnes and 170,000 plants. In addition, Dormul has an application pending for its extraction licence. Upon receipt of its extraction licence, Dormul is expected to become the first company in Uruguay to be approved for medical cannabis based CBD oils for both domestic and export purposes. With a strong commitment to research and development, Dormul has established a strategic partnership with the prestigious Institut Pasteur de Montevideo, a foundation between the Uruguayan and French governments, and was recently recognized by the Uruguayan Ministry of Industry for the important social and economic impact its operations will have for the country.
Marco Algorta, Dormul's founder, stated, "As we develop our patient network in Uruguay and into Brazil, joining the Khiron family gives us access to their market leading expertise and resources, to accelerate our research and development mission, and to deliver medical cannabis products across one of the world's largest trading blocs. We begin with Uruguay, and export to Southern Brazil, and expect to move quickly across the regions trading countries."
Alvaro Torres, Khiron Co-founder and CEO, stated, "This acquisition marks a significant advancement on our strategy to serve the largest markets in Latin America. Like us, NettaGro is a market innovator that is shaping how and where the cannabis industry grows across the region. Welcoming Joseph Mimran and Mike Beck ensures we execute on the potential that NettaGro offers, bringing us exceptional global expertise and unmatched market access."
South America, which includes Uruguay, represents a population of 417 million people, of which countries with approximately 350 million people have recent or pending legislation permitting access to cannabis and/or CBD oils for medicinal use. Of these, Brazil is poised to become the largest Latin American cannabis market with an overall population of 208 million.
Completion of the transaction is subject to the execution of a definitive agreement and receipt of all required regulatory approvals, including final acceptance of the TSX Venture Exchange.
