Sativa Group enters into a LOI with StillCanna, Inc

CBD Producer

Sativa Group Plc (NEX:SATI), the UK’s leading quoted CBD wellness and medicinal cannabis Group, confirmed that is has today entered into a letter of intent (“LOI”) with StillCanna, Inc, regarding a possible offer for the Company.

StillCanna Inc. is a leader in cannabinoid extraction and agriculture, it is focused on the large-scale manufacturing of CBD in Europe and has built two high volume extraction facilities, positioning itself as a leader in the seed to CBD supply.

StillCanna engineered its own proprietary closed loop ethanol extraction systems. The Company believes its proprietary intellectual property allows it to extract CBD at a lower cost. The Company designed its two extraction facilities, running at capacity, to make StillCanna Europe’s largest producer of bulk CBD Distillate and Isolate.

StillCanna’s facility in Romania was built under a joint venture agreement with Dragonfly Biosciences of the UK. The Company’s second extraction facility is built in Poland and operates under StillCanna’s wholly owned subsidiary Olimax.

StillCanna’s shares are presently listed on the Canadian Securities Exchange, OTC Markets in New York and the Frankfurt Stock Exchange.

“We believe this is a truly unique opportunity to create a leading European CBD seed to consumer company. This combination brings together the Sativa Group Plc, the UK’s leading quoted CBD Wellness and Medicinal Cannabis group with StillCanna Inc. focused on the cultivation and extraction of hemp biomass into concentrated CBD extracts”, states Henry Lees-Buckley CEO of Sativa Group Plc.

Sativa brings leading UK CBD Wellness brands including Goodbody Botanicals, Goodbody Wellness, and the Tessellate Collective. It brings production capabilities to support not only Company brands but significant white label business. Sativa provides leading Cannabis testing capabilities with PhytoVista Laboratory, and is also building for tomorrow in the medicinal cannabis segment with a veterinary initiative currently underway.

StillCanna’s extraction and CBD production capabilities in Europe not only support Sativa’s internal requirements but offers opportunity to provide product to CBD and medicinal cannabis customers across Europe.

Sativa and StillCanna share a culture of compliance with each ensuring they have the necessary regulatory approvals. This is even more important as the combined company will focus on achieving European FSA Novel food compliance prior to the March 2021 deadline. The horizon for the combined company is truly Europe wide for both CBD and for extending the Goodbody CBD wellness brands to select markets in Europe.

“Rarely do you find two companies whose industry strengths complement each other resulting in such a synergistic entity,” added Henry Lees-Buckley. 

“We believe only Companies that can control their supply chain, while complying with the upcoming legal framework outlined by the European FSA will succeed in the future marketplace. Through this acquisition both Sativa and StillCanna will benefit through a wider set of market opportunities and compliance”, stated Jason Dussault, CEO of StillCanna.  

Key Terms

·    StillCanna wishes to explore a potential transaction where StillCanna will acquire the entire issued share capital of Sativa in consideration for which StillCanna will issue StillCanna Shares to the Sativa shareholders on the basis of 0.33651 StillCanna Shares for each Sativa share in issue.

·    All options and warrants in Sativa are expected to be exchanged for options and warrants in StillCanna using the same ratio.

·    If the transaction were to be carried out based on the exchange ratio referred to above, Sativa shareholders (as at today’s date) would hold approximately 65% of all StillCanna shares following completion, including all option and warrant instruments outstanding.

·    It is envisaged that the transaction would be achieved through a UK Scheme of Arrangement under Part 26 of the UK Companies Act 2006.

The LOI provides for an exclusivity period, allowing the Company to conduct due diligence on StillCanna. StillCanna will not pursue any alternative transaction to the proposed acquisition of Sativa during the exclusivity period.

Other than in a limited number of circumstances, if StillCanna does not proceed to make an offer to acquire the shares of the Company pursuant to the LOI, StillCanna will be required to pay a break fee to Sativa at the greater of either, £1,000,000, or if StillCanna enters into an Alternative Transaction, 25% of the value paid by StillCanna or for StillCanna’s securities or assets (as the case may be) in such alternative transaction. Discussions remain at a very early stage and accordingly there can be no certainty that a firm offer will be made.

A further announcement will be made in due course.

Under Rule 2.6(a) of the City Code on Takeovers and Mergers (the “Code”), StillCanna, Inc. must, by no later than 5.00 p.m. BST on 20 May 2020, either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

As the terms of the proposed transaction are analogous to a reverse takeover in that the Company’s shareholders may acquire a controlling interest of approximately 65% of all StillCanna shares following completion (on the basis of the exchange ratio referred to above), trading in the Company’s ordinary shares on the AQSE Growth Market will be suspended pending a receipt of a firm intention to make an offer for the Company, or confirmation being received from StillCanna that it does not intend to make an offer.

This announcement has been made with the approval of StillCanna, Inc.

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