Zelira and Health House International to merge

By Market Index
Thu 24 Feb 22, 7:48pm (AEDT)

Key Points

  • Zelira has agreed to provide a $1.5m short-term loan facility to help Health House
  • Proposed merger will expand the market reach of Zelira's medicinal cannabis products
  • Zelira’s revenue profile will be accelerated

Shares in global biopharmaceutical Zelira Therapeutics (ASX: ZLD market cap $39.6m) were down -4% at the close after announcing the planned takeover of Health of House International (ASX: HHI market cap $3.6m) to expand the market reach of its medicinal cannabis products.

The otherwise positive announcement was dragged down along with the broader market (All Ords -3%) following revelations that Russian President Vladimir Putin had authorised military operation in the Ukraine.

As an international distributor of medicinal cannabis, Health House holds several strategic licenses to store, import, distribute, export and sell controlled drugs.

The company is a fully licenced and regulated specialised importer, exporter and distributor of medicinal cannabis products from 14 producers to pharmacies, prescribers, specialist medicinal cannabis clinics and researchers across Australasia.

The agreement

The company has supply agreements in place with several pharmaceutical GMP-certified manufacturers and producers of high-quality medicinal cannabis products, and owns a medicinal cannabis consultancy in Europe, with online services available in six languages.

Subject to Health House’s shareholder approval, Zelira will acquire 100% of the shares [in Health House] a under Scheme of Arrangement that will see the former issue shares to Health House parties at 19.45% interest in the expanded Zelira.

Zelira has also agreed to provide a $1.5m short-term loan facility to help Health House with its short-term working capital requirements.

Stronger post-merger

Zelira management expects the acquisition to result in an organisation with strong medicinal cannabis product and distribution capabilities.

Zelira Therapeutics CEO, Oludare Odumosu Noted:

“The proposed acquisition of Health House will maximise Zelira’s unique capability to develop new clinically validated products that can be marketed and distributed on a global basis.”

While light on specifics, post-merger, Odumosu expects Zelira’s revenue profile to be accelerated.

Health House founder and chairman, David Wheeler, said the proposed merger is a strategic vertical opportunity to increase margins and save costs.

Wheeler notes that Health House already distributes Zelira’s Rx formulations in Australia and has an agreement in place to distribute the SprinjeneCBD toothpaste in the UK.

He also noted that manufacturing will be completed in-house to further improve margins.

Health House shares were down -5.17% at the close today.

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