iAnthus Capital Holdings, Inc. and MPX Bioceutical Corporation announced today that both companies have signed an arrangement agreement pursuant to which iAnthus will combine with MPX in an all-stock transaction with offered equity consideration to MPX shareholders valued at $835 million before giving effect to MPX International and assuming all of MPX’s dilutive securities are exercised prior to the completion of the transaction.
The Agreement represents the first public-to-public merger transaction in U.S. cannabis history.
The Agreement provides that MPX shareholders will be entitled to receive 0.1673 common shares of iAnthus for each common share of MPX held (the “Exchange Ratio”), representing a consideration of approximately $1.28 per MPX common share, a premium of 30.6% based on the closing price of iAnthus and MPX common shares on October 17, 2018.
In addition, each MPX shareholder will receive common shares of the newly formed MPX International which will hold all of the non-U.S. businesses of MPX. MPX International will apply to list on the Canadian Securities Exchange (the “CSE”) with the listing to occur contemporaneously with closing of the transaction. All references to currency are in Canadian dollars.
The combined company, excluding MPX International, will encompass operations and cannabis licenses in 10 states that will permit iAnthus to operate 56 retail locations and 14 cultivation/processing facilities. As a result of the transaction, iAnthus will add retail and/or production capabilities in Arizona, Maryland, Nevada, California and Massachusetts. These additional licenses complement iAnthus’ existing assets in New York, Florida, Massachusetts, Vermont, Colorado, and New Mexico, forming super-regional footprints in both the eastern and western United States.
“This is a watershed moment for iAnthus, as we nearly double the size of our national footprint in the United States.”
Hadley Ford, iAnthus
The 10 states combined are projected to generate approximately $16.2 billion in yearly cannabis sales by 2022, according to Arcview Market Research and BDS Analytics.
“This is a watershed moment for iAnthus, as we nearly double the size of our national footprint in the United States. iAnthus will be uniquely positioned for success on the U.S. East Coast, while solidifying our cultivation and retail presence with the additions of California, Nevada, Maryland and Arizona,” said Hadley Ford, CEO of iAnthus.
“Since its inception, iAnthus has been strategically focused on building scale, and this announcement crystallizes our positioning as one of the largest multi-state operators in North America.”
MPX is a vertically integrated, multi-state cannabis operation which provides management, staffing, procurement, advisory, financial, real estate rental, logistics, and administrative services to medicinal cannabis enterprises across its holdings in five states.
“MPX is committed to providing the strongest value possible to our shareholders, and we feel that working with a best-in-class operator like iAnthus provides us with the best opportunity to achieve that goal,” said Scott Boyes, Chief Executive Officer of MPX.
“The nascent U.S. cannabis market is still in a land-grab phase, and we feel that our footprint when combined with iAnthus, provides our investors with the strongest possible exposure to this explosive marketplace.”
“The opportunity in front of us is enormous.”
Beth Stavola, MPX
“The U.S. cannabis market depends on three key factors for success: scale, access to capital and great people to make it all work,” said Mr. Ford. “This acquisition improves our position in all three. We are especially thrilled to have Beth Stavola, an early pioneer and visionary in the industry, join our board and senior leadership.”
“The ability for the combined company to sell products across 10 states with an addressable market of 112 million people, combined with the shared management philosophy of driving best practices across all our operations, was key to my excitement about joining forces,” said Beth Stavola, Chief Operations Officer of MPX, who will become Chief Strategy Officer and Director of the resulting company. “The opportunity in front of us is enormous.”
Directors and officers of iAnthus and MPX have entered into support agreements pursuant to which they have agreed to vote their shares in favour of the Agreement. Upon completion of the transaction, the board of directors of the combined company will be increased to 7 directors, with 3 directors being nominated by MPX.
The Agreement provides that MPX is subject to non-solicitation provisions and provides that the Special Committee of MPX may, under certain circumstances, terminate the Arrangement in favour of an unsolicited superior proposal, subject to a termination fee of $25 million to iAnthus and subject to a right to match the superior proposal.
The Agreement will be carried out by way of plan of arrangement under the Business Corporations Act (British Columbia) and will require the approval of at least 66 2/3% of the votes cast by MPX shareholders at a special meeting expected to take place in January 2019.
Closing remains subject to approval of the shareholders of MPX, court approval, the approval of the CSE, applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature.Cannabis Business Worldwide