This cannabis and psychedelics company has announced merger plans…
The post Creso Pharma (ASX:CPH) share price sinks on Red Light Holland merger plans appeared first on The Motley Fool Australia. –
The Creso Pharma Ltd (ASX: CPH) share price is sinking on Thursday after announcing merger plans.
In morning trade, the cannabis and psychedelics company’s shares are down 5.5% to 17 cents.
Why is the Creso Pharma share price sinking?
Management notes that this will create a leading global psychedelics and cannabinoid company with an implied pro forma equity value of A$371 million (C$347 million). This is based on the closing price of the shares of Creso Pharma and Red Light Holland on 15 June 2021.
According to the release, the agreement will see Red Light Holland acquire all the issued listed shares and options of Creso Pharma. Under the terms of the agreement, shareholders will receive 0.395 of a Red Light Holland share for each fully paid ordinary share of Creso Pharma.
The HighBrid Lab’s proposed non-executive Chairman, Bruce Linton, commented: “Having worked with both the Creso Pharma and Red Light Holland teams closely in the past, I am really excited by the potential this combination brings. As a merged company, The HighBrid Lab has access to four of the highest growth industry segments around, and the team, board and advisory group to make real progress within these verticals. I’m really looking forward to rolling up my sleeves and helping The HighBrid Lab get to work!”
This sentiment was echoed by Red Light Holland’s CEO and Director, Todd Shapiro.
He said: “Red Light Holland has significant capital and expertise, and is motivated for growth. The company understands the sensitive complexities of the ingredients we deal with, while ensuring we continue to make a bold yet careful push to provide and increase access for immediate revenue generation and brand expansion. Our core principle is to compliantly lead with edgy consumer packaged goods focused on positive outcomes, while balancing a responsible, regulated and educational use approach through technology and innovation.”
“Merging with Creso Pharma, who also has significant cash on hand, and formulating The HighBrid Lab, with Bruce Linton as Chair of the Board, means we can expand our premium product offerings globally in the high growth CBD, THC and psychedelic sectors. Together we are bullish on developing world class products with naturally occurring ingredients in clever and innovative ways for both humans and pets, which completely aligns with Creso Pharma’s R&D and sales approach,” he added.
Mr Shapiro will lead the merged company as CEO and a director.
Shareholders will be given the chance to vote on the proposal in the near future. The release explains that the transaction will require the approval of 75% of the votes cast by Creso Pharma shareholders, as well as court approval.
Though, judging by the Creso Pharma share price performance today, that may be far from guaranteed. It appears as though some investors are unsure by the company’s plans.
Wondering where you should invest $1,000 right now?
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.
*Returns as of May 24th 2021
Why the Creso (ASX:CPH) share price is racing 6% higher
Why the Creso (ASX:CPH) share price is up 35% in two days
Why the Creso (ASX:CPH) share price is shooting 11% higher
Why Aristocrat Leisure, Creso Pharma, Nuix, & Resolute are charging higher
James Mickleboro does not own Creso Pharma shares. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.