FGH to Acquire German Pharmaceutical Distributor

Franchise Global to Acquire German Pharmaceutical and Medical Cannabis Products Distributor, Strengthening its Position in the German Pharmaceutical and Medical Cannabis Market

The acquisition is expected to strengthen operations and drive synergies in Germany, a key region of the Company’s growth strategy

VANCOUVER, BC / ACCESSWIRE / May 16, 2022 / Franchise Global Health Inc. (“Franchise Global” or the “Company“) (TSX‑V:FGH;FRA:WV4A) is pleased to announce that it has entered into a letter of intent (the “LOI“) dated effective May 6, 2022, outlining the general terms and conditions pursuant to which it has agreed to acquire a leading German pharmaceutical distributor (the “Target Company“). Management of Franchise Global expects that the acquisition, if completed, will strengthen the Company’s end-to-end pharmaceutical, medical cannabis operations and infrastructure in Germany, a key market for the Company.

Clifford Starke, CEO, director and Executive Chairman of Franchise Global, commented: “This acquisition will strengthen our position in Germany. The Target Company has significant experience with regulatory requirements, pharmaceuticals and medicinal cannabis. We expect it to be a solid addition to Franchise Global’s core position in Germany, providing deeper access to further pharmacies, wholesale distribution channels and advancing our business plan as Germany moves closer to full legalization of recreational cannabis.”

The Target Company has become a leading German pharmaceutical distributor, offering a wide range of products for some of the top medical brands in Germany.

The transaction is expected to strengthen Franchise Global’s growing presence in Germany. The Company has previously acquired a 100% interest in Hilzingen-based Phatebo GmbH, a leading distributor of export pharmaceuticals and medical cannabis products in the European Union. Franchise Global believes it has an early-mover advantage in the European market after receiving the first medical cannabis import and distribution license granted in Germany in 2017.

“We are focused on leading the pack in the medical cannabis market in Germany,” said Clifford Starke. “By merging Franchise Global’s experience with the Target Company’s market presence, we are well on our way to be one of the premier German pharmaceutical and medical cannabis companies.”

Under the terms of the LOI, the Company will acquire 100% of the Target Company, and all of its subsidiaries and affiliated entities that form its business, as well as all the intellectual property used in the business of the Target Company (the “Acquisition“), for aggregate consideration of €18 million, with €15.3 million payable in cash and €2.7 million to be paid in common shares of the Company. In addition, Franchise Global will pay an earn-out of up to €9 million, payable in common shares of the Company, based on financial performance of the Target Company in fiscal 2024. The common shares will be issued at a value equal to the 10-day volume weighted average trading price prior to issuance. It is expected that the cash portion of the purchase price will be funded by Franchise Global through proceeds of financing initiatives.

The LOI serves as an agreement-in-principle concerning the Acquisition, and the final structure of the Acquisition and its terms and conditions will be subject to receipt by all parties of tax, corporate and securities law advice and will be agreed to and the LOI will be superseded by a definitive agreement, which will contain additional customary representations, warranties, covenants, opinions, conditions and indemnities. The Acquisition will be subject to customary closing conditions including the approval of the TSX Venture Exchange, all other required regulatory, shareholder (including shareholders of the Target Company) and corporate approvals, compliance with covenants, no material adverse effect, absence of litigation, receipt of audited financial statements of the Target Company and completion of diligence.

The Acquisition is expected to be a “Fundamental Acquisition” as defined in the policies of the TSX Venture Exchange. It is expected that the Company’s stock will remain halted until the TSX Venture Exchange completes its review of the proposed Acquisition. A more comprehensive news release will be issued by the Company disclosing further details of the Acquisition (including information about the identity of the Target Company and other relevant information) upon the parties entering into the definitive agreement. Subject to the entering into of the definitive agreement relating to the Acquisition, and the satisfaction or waiver of all conditions precedent to closing, it is expected that the Acquisition will close in the fourth quarter of 2022.

About Franchise Global

Franchise Global, through its subsidiaries, is a multi-national operator in the medical cannabis and pharmaceutical industries, with principal operations in Germany and with operations, assets, strategic partnerships and investments internationally. Franchise Global’s business objective is to develop a fully‑integrated, leading European medical cannabis business, with the goal of providing high-quality pharmaceutical grade medical cannabis to distribution partners and, ultimately, to patients, at competitive prices. For more information please visit www.franchiseglobalhealth.com.

Media Enquiries and Contact for Further Information

Clifford Starke, CEO and Executive Chairman Tel: +1 (778) 847 1880

Buchanan Communications Ltd Tel: +44 (0) 20 7466 5000

Jamie Hooper / Ariadna Peretz FGH@buchanan.uk.com

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS PRESS RELEASE.

Cautionary Statement Regarding Forward-Looking Information

This news release contains “forward-looking information” within the meaning of applicable securities laws, including without limitation statements regarding the potential acquisition of the Target Company, the expected benefits and synergies of the Acquisition to the Company’s business, the expectation that Germany will continue towards the full legalization of cannabis, the Company’s financing plans, satisfaction of conditions to completing the Acquisition including approval of the TSX Venture Exchange, as well as statements regarding the business of Franchise Global and its prospects. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements formed in the future tense or indicating that certain actions, events or results “may”, “could”, “would”, “might” or “will” (or other variations of the foregoing) be taken, occur, be achieved, or come to pass. Forward-looking information is based on management’s current expectations, estimates, beliefs and/or opinions and is based on information currently available to them (including information obtained from third party industry analysts and other third-party sources) and on assumptions they believe not to be unreasonable in light of all of the circumstances. Some of the key assumptions and estimates relied on by management of Franchise Global in expressing the forward‑looking information in this news release include assumptions regarding the Company’s ability to negotiate definitive documentation and complete the Acquisition on the timeline expected, that conditions to completing the Acquisition will be satisfied or waived, that the opportunities represented by historical growth in the German medical cannabis market will continue and that Germany will continue towards legalization of cannabis, and that the Company’s business will benefit from expected synergies following completion of the Acquisition.

By its nature, forward-looking information is subject to both known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such risks and uncertainties include, without limitation, risks relating to the inability of the parties to negotiate definitive documentation relating to the Acquisition in a timely manner, or at all, the risk that not all of the conditions to completing the Acquisition will be satisfied or waived, the risk that the synergies the Company expects to realize from the Acquisition will not materialize as expected, or at all, risk that the Company will be unable to obtain sufficient financing on acceptable terms, or at all, general economic conditions, counterparty risk, regulatory factors, the financial markets generally and risks associated with growth and competition. There can be no assurances given that the Acquisition will be completed on the terms contemplated, or at all. Accordingly, readers are cautioned to not place undue reliance on forward-looking information. Please refer to the filing statement of the Company available on the Company’s SEDAR profile at www.sedar.com for more details on the risks and uncertainties faced by Franchise Global. Any and all forward-looking information contained in this news release is expressly qualified by this cautionary statement, and the Company undertakes no obligation, and does not intend, to update any forward-looking information contained in this news release, whether as a result of new information, future developments, or otherwise, except as otherwise required by applicable law.

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SOURCE: Franchise Global Health Inc.

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