Medmen Enterprises, Inc. (CSE:MMEN) (OTCQX:MMNFF) (FSE:A2JM6N) Enters Into Agreement For Acquisition Of PharmaCann And Closes San Francisco Bay Dispensary
- MedMen Enterprises, Inc. (CSE:MMEN) (OTCQX:MMNFF) (FSE:A2JM6N) has entered into a business combination agreement with PharmaCann although it is expected that each company will continue pursuing their respective businesses.
- In the new arrangement, PhramCann Shareholders are expected to be issued with new MedMen class B shares which will be approximately 25%.
- MedMen has equally announced that they are closing the acquisition of San Francisco Bay dispensary days after acquisition of a license.
MedMen Business Agreement with PharmaCann
MedMen and PhramaCann announced on October 11, 2018, that they were signing a Business Combination agreement that intends to combine their corresponding businesses. The deal will form a new holding company “New MedMen” which will acquire all PharmaCann securities in exchanges for New MedMen class B voting shares that are similar to the current MedMen Class B shares. The transfer of shares will be done on a one on one basis in line with agreement‘s plan as provided for in British Colombia laws. Equally, MedMen’s Class A shares shall be exchanged in the New MedMen plan for New Class A super-voting shares per the agreement.
The new Class B shares will hold the same value as the previous MedMen Class B shares before the agreement regarding economic value. The structuring of the agreement gives a provision to exchange the present MedMen shares for those of the new holding company and apart from the legal change in the company shareholders will continue to enjoy all economic rights for both the Class A and B shares subject to incorporation in British Colombia. For those shareholders who have share certificates, they are expected to return them for exchange following the agreement, and for New MedMen shareholders they shall receive shares to it without any action.
Prospects of New MedMen
The arrangement gives PharmaCann a chance to nominate two directors to the MedMen board of directors. MedMen has equally agreed in under the agreement to be lending PharmaCann certain amount to enable them to make expenditures in line to an interim expenditure plan that was agreed upon closing. The funds that shall be given to PharmaCann are expected to bear market interest rates, and in the event, the agreement is terminated, PharmaCann is expected to reapply the money lent within 12 months.
Similarly, the acquisition and other pending ones are expected to have a number of U.S. Licenses for cannabis that permits the pro forma holding company to operate a series of retail cannabis stores as well as cultivation and cannabis production facilities. New MedMen is expected to have jurisdiction in 12 states that are estimated to have a total addressable market of $40 billion by 2030. As a result of the agreement, the company is looking to add licenses in Michigan, Pennsylvania, Maryland, Illinois, Ohio, New York, and Massachusetts.
Closing the San Francisco Bay dispensary acquisition
Days after announcing license acquisition of a dispensary from Emeryville California, MedMen has announced that they are closing the acquisition. In accordance with the acquisition, MedMen is said to have paid a combination of cash and shares at closing in an undisclosed sum. The acquisition closed in a record 90 days, and with the acquisition closing, MedMen will remain with only one license issued in Emeryville for cannabis dispensary. This will be the only dispensary outside San Francisco in south California where MedMen operates around eight dispensaries. The Emeryville dispensary is expected to open next year, and it will be situated in the San Francisco’s East Bay.
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