Early this morning, the company announced it has entered into an agreement to acquire 51% of UK based Theros Pharma Ltd., an early stage company which has imported medical cannabis to patients in the UK previously. The United Kingdom has recently sanctioned the use of medical cannnabis countrywide, with product available at pharmacies via prescription. Medical physicians may now prescribe products containing cannabis, cannabis resin or cannabinol at their discretion.
Terms of the deal are stock compensation-based, however back-end loaded. Wayland Group has agreed to make an initial payment of 3,800,000GBP (approximately C$6.45 million) followed by a second payment of 24,000,000GBP (approximately C$41.5 million) following certain milestones being achieved. One key milestone includes the issuance of a license to cultivate cannabis in the UK or a license to import medical cannabis for use in the UK. Both common share payments are subject to then-current market prices, at a floor issue price of $1.65/share.
The big takeaway in this whole equation is Wayland Group’s aggressive and ongoing worldwide expansion taking place. It has more commonality with activities undertaken by Aurora Cannabis, Aphria and Canopy Growth than it does with anything arising in the junior cannabis space. With this foray into the UK, Wayland is now entrenched in at least five European Union countries, on top of its South American footprint announced earlier this month.
And there’s more coming: CEO Ben Ward told Midas Letter Founder James West recently that, “I think we’ll be looking at something there in the near future…” in terms of an international presence in Japan.
A mid-year report published by the Institute of Economic Affairs pegged the current black market in cannabis is worth £2.6 billion per annum, with 255 tonnes sold to three million users in 2016/17. It’s unclear what the true scale of a combined medical/recreational market is, as there’s clear cross-correlations between the two (i.e. self-medication).
What is clear is that Wayland Group is making a move to capitalize on the sanctioning of medical cannabis within its shores. Few Canadian licensed producers have established and tangible operation in the United Kingdom to date. Wayland Group’s salvo aims to establish an early presence in a market that has no clear front-runner.
WAYL is up marginally on the news, $0.04 to $1.46/share (↑2.82%).
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