Halo to acquire Swiss CBD start-up for up to €100 million

Phytocann is currently selling its products business to business in several European countries, while selling business to consumers in Switzerland and France. Products include CBD oils, vapes, pollens, cosmetics, food & beverages. The Company's brand lineup currently consists of Ivory Swiss Premium, Harvest Laboratoires, Easy Weed, Kanolia, Herboristerie Alexandra, Buddies, Ghosty Buds, and Qanabox. Starting from their 10,000 m² grow facility in Switzerland, Phytocann solidified their strong position in the European market by completing three acquisitions in Switzerland in 2020, then two acquisitions in France and Luxembourg in 2021.

Phytocann's audited 2020 revenue and earnings before taxes, depreciation, and amortization ("EBITDA") were approximately €5.3 million and €1.2 million, respectively, for the twelve-month period ended December 31, 2020. After the Planned Acquisition is completed, Phytocann's management projects net revenues and EBITDA of approximately €17 million and €4.3 million, respectively, for the first twelve-month period.  These projections are based solely on Phytocann's existing European business driven by traditional and e-commerce revenue, and do not include contributions from Halo's operations non-THC company portfolio, and the launch of Phytocann's brands and e-commerce platforms into the United States.

Under the terms of the letter of intent, Halo is offering upfront consideration of €12.2 million (the "Upfront Consideration"), with a further potential earn-out (the "Earn-Out Consideration") of up to €87.8 million in debt.

Halo is proposing to acquire Phytocann through a wholly owned subsidiary to be formed by Halo, in Ontario, Canada; Phytocann International Holdings ("PIH"). PIH is the planned vehicle for all of Halo's remaining non-THC assets anchored by Phytocann. Alexandre-Henri Lacarré, the founder of Phytocann and a successful European entrepreneur, is expected to lead PIH as its CEO upon closing of Planned Acquisition.

"The potential acquisition of Phytocann is a cornerstone of our shareholder value enhancement strategy," commented Kiran Sidhu, Halo's Chief Executive Officer. "Phytocann brings multiple, premium-branded CBD products that complement Halo's existing wellness offerings developed for the United States market. In addition, we see meaningful synergies with Halo's recent acquisitions of Dissolve Medical, H2C Beverages, Simply Sweet Gummies, and Hushrooms. Halo's distribution agreement with Sway Energy is also expected to be contributed. Importantly, the addition of Phytocann's high-margin CBD business is projected to be immediately accretive to Halo's bottom line. We believe that by separating the THC and non-THC businesses, we can significantly enhance value creation for all of Halo's stakeholders."

(Press release / SK)