RAMM Pharma to Acquire 100% of Leading Vertically Integrated European Cannabis Company Canapar Corp.

Published: May 13, 2021

RAMM Pharma to Acquire 100% of Leading Vertically Integrated European Cannabis Company Canapar Corp.

RAMM Pharma Corp., a leader in plant-derived cannabinoid pharmaceutical and other cannabis-based products,  announced that the Company has entered into a definitive acquisition agreement with Canapar Corp. and a wholly-owned subsidiary of the Company on May 11, 2021, that provides for the acquisition of all the common shares of Canapar that the Company does not currently own in exchange for an aggregate of approximately 21,904,095 common shares RAMM at a deemed value of $1.20 per Ramm Share for a total purchase price of approximately $26.2 million.

Based in Italy, Canapar is positioned to become one of Europe’s largest vertically integrated cannabis companies. Canapar’s state-of-the-art extraction facility is the largest in Europe and has been custom designed to produce active compounds to be used in high-quality pharmaceutical, wellness and cosmetic products from its 1,000-hectare organic hemp production and processing platform. The strategic acquisition is expected to further enhance RAMM and Canapar’s ability to capitalize on the rapidly expanding European and global cannabis markets, provide additional distribution opportunities for RAMM’s portfolio of internationally registered cannabis-based products, and leverage Canapar’s significant investment in its vertically integrated operation to provide economies of scale and supply chain control.

RAMM initially acquired a 49% stake in Canapar in December 2020 and invested $3 million in Canapar through a convertible note in January 2021.

“This is a transformational acquisition for RAMM as it further strengthens our presence as a leader in the European cannabis market with a prominent and differentiated global cannabis platform,” stated Jack Burnett, Chief Executive Officer of RAMM.

“We are pleased to be advancing our successful relationship with RAMM. This acquisition will create additional opportunities for operational synergies and an increased ability to cross-leverage our respective expertise and product portfolios globally and access to growth capital,” stated Sergio Martines, Chief Executive Officer of Canapar and proposed Director of RAMM.

Strategic highlights of the Transaction

  • Transformational acquisition to enter the European cannabis market and introduce RAMM’s best-in-class cannabinoid pharmaceutical and other product formulations to a population of over 750 million people.
  • Canapar is Europe’s first fully integrated CBD (cannabidiol) company with approximately $35-million invested to date and is positioned to become one of Europe’s largest CBD extraction companies with commercial sales commencing in the coming months.
  • Significant Canapar supply contracts in place including a five-year agreement for 38.5 million euros (7.7 million euros per year) with a leading ingredient company for full spectrum CBD oil. Additional contracts being actively pursued and negotiated.
  • Multiple source business-to-business and business-to-consumer revenue strategy in place to establish Canapar as a leading European supplier of high-margin CBD, active pharmaceutical ingredients (APIs) and wellness products. To date, Canapar has commercialized a full line of wellness products (35 SKUs) under its house brand Marishanti and has opened two Marishanti branded retail stores.
  • Canapar is led by a globally renowned team with extensive entrepreneurial and leadership experience in pharmaceutical licensing, the development and commercialization of consumer products, deep industry relationships, as well as distinguished scientific and agricultural and expertise.
  • Canapar’s extraction facility is designed to meet EU-GMP (European Union-good manufacturing practice) and AIFA (Italian Medicine Agency) standards, with certification expected in 2022. As the largest pharma-grade extraction facility in Europe, with 450,000-kilogram biomass extraction capacity and approximately 10,000 kg CBD (based on 3% biomass) production capacity annually, industry-leading production costs to be realized.
  • Strategically located in Italy, one of the strongest European cannabis markets, and the European country with the most progressive regulatory framework for hemp cultivation and CBD extraction. Made in Europe production is protected from tariffs and EU protectionist measures.
  • RAMM has a strong financial position with net working capital of approximately $18.8 million (19 cents per share) including $16.2 million of cash (16 cents per share) and no debt at April 30, 2021.Canapar has net working capital of approximately $9 million and $4 million of cash as at April 30, 2021. Canapar’s total assets are approximately $27m as at December 31, 2020 and its only debt is its convertible promissory notes, which will be converted as part of the Transaction as outlined below.

Terms of the Transaction
The Company proposes to acquire all the outstanding Canapar Shares, other than any Canapar Shares currently held by the Company (that were acquired by the Company from RIV Capital Inc. on December 30, 2020). The purchase price will be satisfied by the issuance of RAMM Shares to the shareholders of Canapar (other than the Company) having a deemed value equal to C$1.20 per RAMM Share. The purchase price is based on a value of C$0.65 per Canapar Share and approximately 40,438,330 Canapar Shares (other than the Canapar Shares held by the Company) issued and outstanding immediately prior to the effective time of the Transaction, which also includes approximately 6,761,214 Canapar Shares issuable upon the conversion of outstanding promissory notes of Canapar, including the principal amount and unpaid interest thereon (the “Notes”) (other than the Notes held by the Company), and approximately 2,784,616 Canapar Shares issuable upon the exercise of vested stock options of Canapar on completion of the Transaction.

On closing of the Transaction, Sergio Martines, the current Chief Executive Officer of Canapar, will be appointed to the board of directors of RAMM such that the four-member board of RAMM will consist of: Jack Burnett (Chairman), Daniel Augereau, Eric Klein, and Sergio Martines. Mr. Martines will also be appointed to the senior management team of the Company and will keep the position of Chief Executive Officer of Canapar Corp. The Transaction is subject to standard closing conditions, and the approval of the shareholders of Canapar, which will be sought at a special meeting expected to be held on or about June 4, 2021, with closing expected to occur shortly thereafter. Matthew Bajurny has also stepped down from the board and the Company wishes to thank Mr. Bajurny for his contributions.

Management Appointments
RAMM is also pleased to announce it has appointed Guillermo Varela, CPA as Interim Chief Financial Officer. Mr. Varela is a Certified Public Accountant and the former Chief Financial Officer of GrüneLabs, a cannabis pharmaceutical laboratory with operations in Portugal and Uruguay. Mr. Varela is ideally suited to lead the Company’s financial oversight with his unique experience in the European and South American cannabis industry. RAMM would like to thank Matias Piñeiro for his service as CFO of the Company since 2019 and through RAMM’s public listing.

About the European Cannabis Market
Europe represents one of the largest potential cannabis markets globally. The Europe cannabis market is currently valued at US$3.5 billion and expected to reach US$37 billion by 2027 with an anticipated CAGR of 29.6% from 2020 to 2027 (ResearchAndMarkets.com, 2020). European countries are experiencing a transformation in the regulations for marketing cannabis and related products, facilitating easier cultivation, processing, and trade of the cannabis-derived products across this region.

About Canapar Corp.
Canapar with its wholly owned subsidiaries in Europe is an Italy-based manufacturer and processor of CBD oil, distillates and isolates, which are increasingly used as an input into new commercial products in the health and wellness industries. Canapar had secured more than 1,000 hectares of hemp through its outsource farming model and entered into an academic partnership with the University of Catania’s Department of Agriculture. Canapar is also advancing its CBD extraction and processing capabilities through its new facility and is expecting to transform 450 metric tons of hemp biomass annually into CBD isolates and derivative products for distribution in Europe following the commissioning of its extraction machinery. With demand for products that contain natural active ingredients derived from plant extracts increasing significantly, Canapar plans on developing CBD-infused cosmetics, skincare, and beauty products for the Italian cosmetics market, which is the fourth largest such market in Europe, as well as the global market, which provides strong demand for “Made in Italy” brands. A video overview of Canapar’s operations can be found on-line, and additional information about Canapar and can be found on its website at https://www.canapar.com/.

About RAMM Pharma Corp.
Led by renowned cannabis industry experts and backed by successful pioneers in the cannabis sector, RAMM is a leader in the field of cannabinoid pharmacology and product formulation for cannabis-based pharmaceuticals and other cannabis-based products. RAMM Pharma Corp. includes wholly owned subsidiaries Medic Plast SA, Yurelan SA, Glediser SA and RAMM Pharma Holdings Corp. Additional information about the Company is available at www.RAMMpharma.com.

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