MMJ subsidiaries: United Greeneries and Satipharm to list on TSX-V
Subsidiary divisions of medical cannabis company MMJ PhytoTech Limited (ASX:MMJ); United Greeneries Holdings Ltd and Satipharm AG, plans to list on the Canadian TSX-V exchange.
A binding term sheet has been signed between MMJ and the TSX-V listed company Top Strike Resources Limited (TSX-V:TSR), for Top Strike to acquire 100% of the issues shares in United Greeneries and Satipharm.
The planned reverse takeover remains subject to shareholder approval, due diligence and completion of the financing and execution of a definitive agreement.
MMJ shareholders will gain exposure to the rapidly growing recreational and medical cannabis markets in Canada.
Following the spin out, shareholders in MMJ will have indirect ownership in the fully-financed brands United Greeneries and Satipharm, whilst also gaining exposure to the Canadian market.
The aggregated sale price of United Greeneries and Satipharm (C$40 million) which represents approximately 97% of MMJ’s current market capitalisation at a share price of $0.24.
Since July 2016 MMJ share price is down 6% whilst peers are up 175% on average:
The listing of MMJ’s subsidiaries on the TSX-V exposes the brands to Canada’s capital markets that have seen over $200M raised since March 1st, 2016 by MMJ’s peers.
The Canadian cannabis market is one of the most highly regulated and favourable operating jurisdictions in the world. Of the 34 approved companies operating under the current regulatory conditions, only 10 are publicly listed in Canada.
The medical cannabis market in Canada is expected to grow to C$3 billion in in annual sales by 2024. An average of 5,000 new patients are treated with medicinal cannabis each month, with a total 75,000 patients currently enrolled.
The Canadian recreational market has a conservative estimate value of around C$5 billion per annum.
With the Canadian government committed to introduce new regulation surrounding recreational use of cannabis, MMJ’s subsidiaries may benefit from first mover advantage.
There is no guarantee these laws will be passed or will translate into commercial revenues for MMJ and its subsidiaries so please conduct your own due diligence and seek professional financial advice before making any investment decision.
MMJ expects the reverse takeover transaction to be finalised and listed on the TSX-V before the end of December 2016.