Medical cannabis company AusCann to be bought by TWH

TW Holdings (ASX:TWH) has announced its intention to purchase medical cannabis company AusCann. The news follows the introduction and passing of the Narcotic Drugs Amendment Bill to parliament last month, which legalised the cultivation and use of medicinal cannabis in Australia.

Under the terms of the deal, TWH has entered into a non-binding heads of agreement to buy all of the issued capital of AusCann. Once the proposed acquisition is completed, the current TWH directors will resign and be replaced by:

• Dr Mal Washer (Non-Executive Chairman) — medical doctor and former Federal Member of Parliament
• Elaine Darby (Managing Director) — science/law background and extensive experience with clinical trials and regulatory environments
• Harry Karelis (Executive Director) — science/finance background with extensive capital markets experience particularly in start-up environments
• Mick Palmer AO APM (Independent Non-Executive Director) — former Head of the Australian Federal Police
• Hon Cheryl Edwardes (Proposed Independent Non-Executive Director) — lawyer and former Attorney General and Environment Minister in Western Australia

After the transaction, TWH will change its name to AusCann Group Holdings.

Darby, AusCann’s current managing director, said the proposed takeover marks the next logical step in AusCann’s development. She noted that the bolstered board and management team has extensive experience in a wide range of areas including government, medicine, law enforcement, biopharmaceuticals and capital markets.

TWH Chairman David Wheeler also welcomed the transaction, saying, “The medicinal cannabis field is attracting many players and we believe AusCann represents the best-of-breed company with an impressive team of directors, executives and shareholders behind it.”

Since the proposed acquisition will result in a significant change to the nature and scale of TWH’s activities, it will require TWH shareholders’ approval under ASX Listing Rule 11.1.2 and will also require the company to recomply with Chapters 1 and 2 of the ASX Listing Rules. To enable recompliance and to support its growth strategy post-acquisition, TWH plans to conduct a capital raising to raise at least $3 million.

It is expected that TWH will convene a meeting to facilitate shareholder approval in late May, with the acquisition, issue of shares and name change to be complete by July.

TWH (ASX:TWH) shares closed 42.86% lower at $0.004 on Thursday, the day of the announcement. They had risen slightly to $0.005 as of around 1.30 pm on Friday.

Image credit: ©iStockphoto.com/Terry Lucas