Psychedelic companies Red Light Holland Corp. (CSE: TRIP) (OTC Pink: TRUFF) and Creso Pharma Limited (ASX: CPH) (OTCQB: COPHF) have mutually agreed to terminate the previously announced plan to merge. The two companies had announced in June they would combine, but now cite various impacts from the COVID-19 pandemic, including significant travel restrictions, where they decided that the merger would no longer be in the best interests of their respective shareholders.
“While we determined that a merger was no longer in the best interests of the two companies, we look forward to continuing to work closely with Adam Blumenthal and the rest of the Creso Pharma team as Red Light Holland has agreed to white-label Creso Pharma’s products and distribute them across our SR-Wholesale sales channels,” said Todd Shapiro, CEO and Director of Red Light Holland. “We are also continuing our search for other M&A opportunities as we are confident that our large cash balance puts us in a position of strength as potential progressive regulatory changes in the North American psychedelic and recreational cannabis sectors open up.” Red Light Holland did not that Bruce Linton, the founder and former chief executive officer of Canopy Growth Corporation, will remain as a Chairman of Red Light Holland’s Advisory Board.
As the two companies have significant operations in multiple countries across the globe, the two said that it became increasingly apparent that integration difficulties would limit the anticipated synergies from the proposed merger. The two companies were going to create a new business named The HighBrid Lab. The transaction was to be a reverse takeover of Red Light Holland by Creso Pharma giving Red Light shareholders a 29% premium for their shares. Creso shareholders would’ve owned 57% of the new company. The new company was expected to have a cash balance of approximately C$45 million.
“We respect Todd Shapiro and the entire team at Red Light Holland. Unfortunately, the geographic span of our respective businesses made a merger at this time impractical,” added Creso Pharma’s Non-Executive Chairman, Adam Blumenthal. “We look forward to working with the Red Light Holland team through our new supply arrangement.”