iAnthus and MPX Pursue Merger in US Market

Cannabis Investing News

The two multi-state operators will undergo an all-stock merger and combine their operating assets to hold a presence in 10 legal cannabis states.

US multi-state operator iAnthus Capital Holdings (CSE:IAN) will pay a 30.6 percent premium per share for the merger of fellow operator MPX Bioceutical (CSE:MPX), the company announced on Thursday (October 18).

The transaction will see an all stock merger between the two companies, combining the US presence of the new entity to 10 legal states.

MPX shareholders will gain a C$1.28 consideration per MPX share, which will get them 0.1673 common shares of iAnthus. The total value of the transaction was placed at C$835 million.

“The nascent US cannabis market is still in a land-grab phase, and we feel that our footprint when combined with iAnthus, provides our investors with the strongest possible exposure to this explosive marketplace,” Scott Boyes, CEO of MPX, said in the announcement.

Shares of MPX rocketed in early trading on Thursday following the announcement by 19.39 percent. As of 12:30 p.m. EST, to reach a price per share of C$1.17.

iAnthus also grew in value with a 5.37 percent increase for a price of C$8.05.

Closing of the transaction will require the approval of MPX shareholders. No details were immediately given on the special meeting needed for the approval.

Hadley Ford, CEO of iAnthus, said this was a “watershed” moment for the company and would double the footprint of the company in the fractured US market.

In the US, cannabis remains an illegal drug on a federal level, however, some states have gone ahead and legalized the medical and even recreational use of marijuana.

Companies are tasked with operating growing facilities, retail dispensaries, distribution networks or other assets through a multi-state view.

The combined assets from the two operators will represent 10 states permitted to operate, 56 retail locations and 14 facilities either used for cultivation or processing.

iAnthus will also gain the experience of Beth Stavola, chief operations officer of MPX, who will become chief strategy officer and director of the resulting company. Stavola led the way for MPX in its expansion this year.

The combination between the two companies will also see the creation of MPX International, a new venture which will hold all the non-US assets of the two.

This new company will seek an application to list on the Canadian Securities Exchange (CSE) according to the announcement.

MPX owns Canadian licensed producer (LP) Canveda, an acquisition which was completed as a way to manufacture and distribute cannabis oils, cannabis derivatives and cannabinoid-infused products. MPX purchased Canveda for a total purchase price of C$18.1 million.

Investor takeaway

Following a positive market reaction so far, the play for the US market gets more validation through a combination that continues the trend of mergers and acquisitions in the cannabis space seen throughout 2018.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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