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Flora picking up Cronomed
Posted on Friday, 10 January 2020 16:06
Organic cannabis oils producer Flora Growth has announced the signing of a letter of intent to acquire Cronomed, a Colombian pharmaceuticals manufacturer.
Under the terms of the proposed deal, the buyer would pay a cash sum of USD 1.89 million to current owner Latin Canada Pharma upon completion.
This would be followed by a further USD 2.00 million in cash, subject to Bogota-headquartered Cronomed’s revenue for 2020 increasing on 2019’s by 20.0 per cent by 31st December 2020, while this payment would amount to USD 4.00 million if revenue increases by 40.0 per cent.
As such, the maximum possible consideration is USD 5.89 million.
Completion will be subject to a definitive agreement being reached, as well as the green light from regulatory authorities.
Commenting on the takeover, Flora chief executive Damian Lopez said: “Cronomed is expected to be a significant revenue source for Flora, initially in Colombia and then internationally.
“Using Cronomed’s existing line of products, we expect to be able to start exploring the infusion of cannabidiol (CBD oil).”
Lopez added that the firm will start working with the Colombian National Food and Drug Surveillance Institute (INVIMA) to secure regulatory approval, noting that the deal’s pricing structure is due to the acquiror’s belief that the firm can deliver tangible results during 2020.
Flora also believes its organic CBD oil can be incorporated into its new subsidiary’s range to make its current offering, which comprises 16 medical, 16 nutritional, 10 dietary supplement and four cosmetic products, more effective.
Cronomed currently sells its products to Colombian pharmacies, but hopes to expand into supermarket chains, online outlets and the government sector this year.
There were 2,033 deals targeting pharmaceutical preparation manufacturers announced worldwide during 2019, according to Zephyr, the M&A database published by Bureau van Dijk.
Of these, the largest was worth USD 74.00 billion and took the form of an acquisition as Bristol-Myers Squibb completed its previously announced purchase of US-headquartered Celgene in November.
© Zephus Ltd