Khiron Life Sciences (TSXV: KHRN) acquires NettaGrowth International
Khiron Life Sciences Corp. (TSXV: KHRN) (OTCQB: KHRNF) announced completing the acquisition of NettaGrowth International Inc. and its wholly-owned subsidiary Dormul S.A. first announced on January 25, 2019. As consideration, Khiron has issued 8,498,821 common shares to NettaGrowth at a deemed price of $1.61 per common share. NettaGrowth is a Uruguayan company that obtained the first licence to produce and export medical cannabis with THC for commercialization in Uruguay.
Alvaro Torres, Khiron CEO explained the acquisition of Nettagrowth is a key milestone for KHRN as it expands the geographic footprint into a market KHRN knows well and secures access to potential patients in Uruguay and in Southern Brazil.
In connection with the acquisition, Mr. Michael Beck, experienced capital markets professional and entrepreneur, has joined the board of Khiron, and Mr. Joseph Mimran, experienced brand builder and entrepreneur, has joined the board of Khiron Colombia S.A.S. Torres comments, "The addition of Mike Beck to our board, and Joe Mimran to the board of Khiron Colombia further add to our highly experienced and proven leadership capabilities as we solidify our position as a cannabis leader in Latin America."
I received some pushback implying that $1.61 per share was too low a price when the market price of KHRN is around $2.50 per share. Here are a couple of points to bear in mind. First, the acquisition was initially negotiated in early 2019 and the $1.61 per share was in the context of the market at the time. Second at $1.61 or $2.50 the value of the acquisition is $13.7 to $21.2 million. In terms of the range of cannabis investments made in the Latin/South American region, to me the price seems very fair and reasonable.
In my opinion, the acquisition of NettaGrowth and the ongoing addition to the management group, represents a major advancement for KHRN. As I explained above, a company that continues to forge ahead during a generally declining stock market becomes a bargain. From an investment point of view, KHRN represents a significant buying opportunity. In looking back from six to twelve months in the future, I believe investors will either thank their lucky stars they bought shares at or near these levels or rue the fact that they didn’t.