Aphria to ac­quire CC Pharma for 24.5M eu­ros

Stockwatch Daily - - FRONT PAGE - Mr. Vic Neufeld re­ports

APHRIA INC. has pro­posed to ac­quired CC Pharma GmbH, a lead­ing dis­trib­u­tor of phar­ma­ceu­ti­cal prod­ucts to more than 13,000 phar­ma­cies in Ger­many. The trans­ac­tion, when closed, will strengthen the com­pany’s end-to-end med­i­cal cannabis oper­a­tions and in­fra­struc­ture in Ger-

many, a key mar­ket in Aphria’s in­ter­na­tional ex­pan­sion. It is an­tic­i­pated that the trans­ac­tion will close in Jan­uary, 2019. “This ac­qui­si­tion strength­ens our foothold in Ger­many, one of the most highly sought-af­ter med­i­cal cannabis mar­kets in the world,” said Vic Neufeld, chief ex­ec­u­tive of­fi­cer of Aphria. “CC Pharma is cash flow pos­i­tive and has sig­nif­i­cant ex­pe­ri­ence with reg­u­la­tory re­quire­ments and in­ter­na­tional lo­gis­tics. It will be a strong ad­di­tion to Aphria’s pres­ence in Ger­many, pro­vid­ing deeper ac­cess to the im­por­tant phar­ma­cist chan­nel and ad­vanc­ing our am­bi­tious global growth strat­egy.”

Founded in 1999, CC Pharma is a lead­ing im­porter and dis­trib­u­tor of Euro­pean Union phar­ma­ceu­ti­cals for the Ger­man mar­ket, with over 200 mil­lion eu­ros in an­nual rev­enue. Aphria, through its sub­sidiary Aphria In­ter­na­tional, pre­vi­ously an­nounced a sup­ply agree­ment with CC Pharma to ex­port ap­prox­i­mately 1,200 kilo­grams of med­i­cal cannabis prod­ucts from Canada to Ger­many. With Aphria’s ex­pe­ri­ence as a global cannabis leader, the com­pany will cre­ate a new di­vi­sion of CC Pharma ded­i­cated to med­i­cal cannabis. CC Pharma op­er­ates a pro­duc­tion, repack­ag­ing and la­belling fa­cil­ity at its head­quar­ters in Dens­born.

“We are pleased to join forces with a pre­mier global cannabis com­pany, whose com­mit­ment to qual­ity, safety and pa­tient care closely aligns with our own. This is an ex­cit­ing op­por­tu­nity to build on our es­tab­lished net­work and ad­vance our par­tic­i­pa­tion in a rapidly grow­ing, emerg­ing in­dus­try,” said Dr. Man­fred Ziegler, man­ag­ing di­rec­tor of CC Pharma.

The trans­ac­tion will bol­ster Aphria’s grow­ing pres­ence in Ger­many, which in­cludes a three-pronged ap­proach cov­er­ing de­mand, sup­ply and dis­tri­bu­tion. Ear­lier this year, the com­pany, through its wholly owned sub­sidiary Aphria Deutsch­land, ac­quired a 25.1-per-cent in­ter­est in Ber­lin-based Schoneberg Hos­pi­tal, pro­vid­ing ac­cess to both doc­tors and pa­tients to sup­port ed­u­ca­tion about the ben­e­fits of med­i­cal cannabi­noids. It was also the first step in Aphria Ger­many’s plans to build and op­er­ate pain treat­ment cen­tres through­out Ger­many.

To se­cure a con­stant de­liv­ery of im­ported cannabis for Ger­man pa­tients, the com­pany is build­ing one of the big­gest state-of-the-art GMP-cer­ti­fied (Good Man­u­fac­tur­ing Prac­tices) cannabis vaults in Bad Bram­st­edt, north­ern Ger­many, with a stor­age ca­pac­ity of 5,000 kilo­grams. To pre­pare for in-coun­try cul­ti­va­tion in Ger­many, Aphria is plan­ning on build­ing a re­search and devel­op­ment in­door grow­ing fa­cil­ity in Neu­mun­ster, Ger­many.

“We are fo­cused on lead­ing the way in the med­i­cal cannabis mar­ket in Ger­many,” said Hen­drik Knopp, man­ag­ing di­rec­tor of Aphria Ger­many. “By com­bin­ing Aphria’s ex­per­tise with CC Pharma’s es­tab­lished lo­cal mar­ket pres­ence, we are well po­si­tioned to con­tinue on that jour­ney.”

Aphria will pay 24.5 mil­lion eu­ros in cash to CC Pharma at clos­ing, with an earnout mul­ti­ple on fu­ture EBITDA (earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion) of up to an­other 23.5 mil­lion eu­ros fol­low­ing clos­ing, if cer­tain per­for­mance mile­stones are met.

About Aphria Inc.

Aphria is a lead­ing global cannabis com­pany driven by an un­re­lent­ing com­mit­ment to its peo­ple, prod­uct qual­ity and in­no­va­tion. Head­quar­tered in Leam­ing­ton, Ont., the green­house cap­i­tal of Canada, Aphria has been set­ting the stan­dard for the low-cost pro­duc­tion of safe, clean and pure phar­ma­ceu­ti­cal-grade cannabis at scale, grown in the most nat­u­ral con­di­tions pos­si­ble.

We seek Safe Har­bor.

Cole Cac­ciav­il­lani, John Cervini, Arlene Dick­in­son, Shawn Dym, Robert Ko­zlov, Vic­tor Neufeld, Re­nah A Per­sof­sky, Den­nis Staudt, Philip Wadding­ton

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