Toronto-based cannabis financing company Auxly Cannabis Group Inc. (TSX.V: XLY; OTCQX: CBWTF) is expanding into the CBD side of the industry with a newly completed acquisition of hemp grower Inverell S.A.
The $15 million deal consisted of a direct $2 million cash payment and an immediate issuance of $3.5 million in common shares.
The remaining $9.4 million of the acquisition deal will be held in escrow and paid in common shares when Inverell hits pre-determined milestones, such as exporting the companyâ€™s CBD products internationally.
Based in Uruguay, approval for the Inverell S.A. deal was originally granted by the SecretarÃa Nacional para la Lucha contra el Lavado de Activos y el Financiamiento del Terrorismo (SENACLAFT) in early November of 2018.
SENACLAFT approval was regulatory requirement in Uruguay for a foreign company to complete the transaction.
Uruguay recently celebrated the fifth anniversary of recreational marijuana legalization, and has seen an influx of Canadian companies rushing to make deals with local companies to help meet the issue of low supply and high demand.
In early September for instance, marijuana giant Aurora Cannabis (TSE: ACB) acquired major Uruguayan producer ICC Labs Inc. (CVE: ICC) for $290 million.
According to a statement from Auxly Cannabis Group, Inverell planted more than 150 hectares of hemp plants for CBD purposes throughout 2018. The company currently runs a CBD extraction facility to process those plants in the Parque de las Ciencias.
Auxly Cannabis President Hugo Alves had this to say about the acquisition:
Alves further stated the acquisition of Inverell will bolster the companyâ€™s ability to research and develop CBD-based products through wholly-owned subsidiary Dosecann Inc, which operates a licensed processing facility on Prince Edward Island.
In addition to operations through Dosecann and the newly acquired Inverell, Auxly works in the medical market through a partnership with ICC International Cannabis Corporation Inc. (CSE: WRLD).