iAnthus Capital Holdings Inc (CNSX:IAN) Closes MPX Bioceutical Corp (CNSX:MPX) Deal
iAnthus Capital Holdings Inc (CNSX:IAN) (OTCMKTS:ITHUF) (FRA:2IA) CEO Hadley Ford provides a recap of the company’s completed merger with MPX Bioceutical Corp (CNSX:MPX). Ford explains that there are 3 keys to success for US cannabis companies and the MPX deal helps iAnthus meet each condition. The deal grows iAnthus’ footprint as a MSO, was finalized at a reasonable cost to capital, and grows an experienced team that can replicate the company’s products and expansion process market by market. The company will continue to scale its size and profits; it has increased its footprint to 11 states after receiving its most recent license in New Jersey.
Narrator: iAnthus Capital Holdings owns and operates licensed cannabis cultivation, processing, and dispensary facilities throughout the United States. iAnthus announced that they have acquired that they have acquired all of the issued and outstanding common shares of MPX Bioceutical Corporation.
The combined company now has operations in 11 states, that will permit iAnthus to operate 63 retail locations and 15 cultivation and processing facilities. They have retail and production capabilities in Arizona, Maryland, Nevada, California, Massachusetts, and New Jersey, which include existing assets in New York, Florida, Massachusetts, Vermont, Colorado and New Mexico.
iAnthus Capital Holdings trades on the CSE under IAN.
James West: And, uh, I have had the pleasure of conversing with Hadley Ford more times than probably any other CEO in the business. Hadley, how are you?
Hadley Ford: And you still come back for more, that’s amazing.
James West: I just can’t help myself, exactly! Where are you?
Hadley Ford: I am in our boardroom in New York City. This was ground central last night as we crossed the final Ts and dotted the Is, and I’ve been going around meeting institutional investors here in New York who’ve had an interest in the deal all day long.
James West: Okay, great.
Hadley Ford: But I rushed back to the office to meet with you.
James West: Awww. The cockles of my heart are now warmed.
Hadley Ford: Leave your cockles out of it.
James West: [laughter] For the benefit of viewers who might not be familiar with the iAnthus purchase of MPX, or merger, or whatever it actually is, and that’s – I’m saying that on behalf of some viewers who are not exactly sure exactly how it all is. Give us a recap of exactly what you’re doing with the MPX acquisition.
Hadley Ford: Oh, sure. So there’s three keys to success in the US cannabis market: you want to have a footprint that is moving towards national, because that allows you to build a brand, which I think is a big determinant of value going forward.
The second piece is, you want to make sure that you’re able to finance that at a reasonable cost of capital. And the third is, because you’re going to have these national brands, you have to have a team that can replicate that process over and over and over again, market by market.
Somebody’s opening up a chocolate bar in Massachusetts, it has to be the exact same experience in Florida or you’re not really building a national brand.
So MPX checks all three of those boxes. Obviously, it took our footprint from six states to 11; we actually had one overlapping state. From a cost of capital perspective, obviously a much bigger float, much bigger trading vibe should drive down our volatility; should bring down that cost of capital for us.
And the third piece, they’ve proven to be great operators in the states that they’re in. we can now begin to benchmark and take those best practices across our entire network.
So it’s just a win-win-win across all three of those boxes.
James West: Wow, fantastic. And so now, upon completion of the merger, which I guess is today, what now is the total sort of asset package that iAnthus controls?
Hadley Ford: That’s a great question, and, you know, we have shown a tremendous ability to scale over the last year and a half. If you looked at us 18 months ago, I think we had 20 employees and probably 40 million of assets; here we are, 18 months later, 450 employees and over $420 million CAD worth of assets. So we’ve been able to scale that; the pro forma company has done, I think it’s exactly 17 transactions to build the company, showing our ability to grow through M&A, and the combined company has raised about $360 million, showing our willingness and ability to raise capital to finance the buildout of all those companies.
James West: Mm-hmm. Okay, so in a nutshell, iAnthus, at this point would you say, is it safe to consider it as a vertically integrated ISO as a multiple state operator?
Hadley Ford: That would be beyond fair – I think that hits it square on the head, there. We are an owner/operator in 11 states, we’re actually operating in 10; recent license went in New Jersey, but we haven’t started any construction there.
James West: Right. Now Hadley, I want to ask you about: one of the things that I like about iAnthus relative to other multi-state operators in the United States is that –
Hadley Ford: Is the good looking CEO. Don’t say it, you’ll just embarrass yourself.
James West: [Laughter] That’s right! I wasn’t going to take that low hanging fruit, but I like the fact that, you know, you haven’t used your stock as currency in such a way that I’ve seen others, where they offer an inflated share price package or share trade, which ultimately is unfairly dilutive to earlier shareholders. So you always maintain this idea of paying, you know, a reasonable multiple on value, and so that’s kind of the disciplined approach to growing the company through acquisition that makes me an investor in the company.
Is that sort of key to your strategy in growing?
Hadley Ford: Discipline is key, and I think you also touched on the public nature. When my partner, Randy, and I set up this company five years ago, the first words out of our mouth was, what if we had a public company? So from Day One we thought of ourselves as a public company. So capital formation was public; the ability to use our shares in a tax-advantaged way for doing US acquisitions was, you know, paramount to the original structure that we did; and every aspect of it has been about being public.
So we don’t have multi-voting shares with, you know, conflicts, we don’t have a big share overhang. We’ve raised all our money in the public markets. We have a very broad float; we have over 40,000 shareholders across four continents, and we’re very, very disciplined on the M&A front. And, you know, it’s no harm, no foul; we have a lot of relationships in the business. If you can’t come to agreement on valuation, you know, you come back in a couple of years and see if a deal can be done then. But you have to be disciplined every day, because your public is not your money; we’re just stewards of the capital. We’re very thankful for people like yourself who’ve been supportive of us, and we get up every day and we work for you, and we pay close attention to that cost of capital.
James West: Fantastic. So what’s next for iAnthus, then, after this deal?
Hadley Ford: More of the same. I mean, the strategy is pretty straightforward: expand the footprint, build it out in a cost-effective manner with, you know, a good cost of capital, and ensure you have a team that can replicate state by state. So, you know, we’ll continue to do that moving forward. You know, on any given day, we’ve got 30 or 40 M&A transactions on the old spreadsheet, and we’re constantly working two or three, you know, in depth. You know, we’ve grown by acquisition; it wouldn’t be surprising in 2019 to see us add some more companies and begin the integration process with them.
James West: All right. Excellent update, Hadley. Thank you so much for joining us once again. Best of luck, we’ll talk with you soon!
Hadley Ford: Always a pleasure, and we’ll see you soon, thanks.
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