Canadian marijuana companies MediPharm (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ) and VIVO Cannabis Inc. (TSX: VIVO) (OTCQB: VVCIF) are on track to merge next year in an all-equity deal, as long as shareholders and regulators approve.
The newly combined company is projected to bring in $36.5 million in revenue per year and become profitable by the second half of 2024, according to a press release.
The new company, which will keep the name MediPharm Labs, will have an international and medical focus instead of a domestic recreational plan, MediPharm CEO David Pidduck said.
“Both VIVO and MediPharm saw the future in cannabis wellness products and in pharmaceutical drugs containing cannabis,” Pidduck said in the release. “Through this business combination, we have identified the potential for millions in cost and revenue synergies.”
VIVO brings with it connections in the German and Australian medical cannabis markets, and MediPharm is already an established cannabis concentrate company with an international footprint. International sales, under the company’s projections, should account for $14.6 million of the $36.5 million in forecasted revenues.
Following the closing of the merger, existing MediPharm shareholders will have between 65%-79% of the combined company, while VIVO shareholders will own between 21%-35%.
The merger may not be MediPharms’ last. The company has been “actively pursuing M&A opportunities in the industry since June,” Pidduck said and hinted the company has more expansion plans in the works.