Aphria Inc. entered a purchase and sale agreement to sell 26,716,025 shares in Liberty Health Sciences Inc., leaving it with a 28.1% stake in medical cannabis company.
The deal comes after the company recently announced plans to explore strategic alternatives with respect to its U.S. cannabis-related interests.
Under the agreement, Aphria will sell 80% of the shares being offered to Michael Serruya, Simon Serruya and Jack Serruya of the Serruya family, who will buy them individually or through an affiliate, and the remaining 20% are being purchased by an affiliate of Delavaco Capital.
Michael Serruya and Simon Serruya are managing directors of Serruya Private Equity, a Toronto-area based, family managed group that invests capital in a broad range of asset classes, with an emphasis on retail and real estate.
The share sale was priced at C$1.25 per share in exchange for short-term notes for C$33.4 million. The short-term notes are noninterest-bearing and are due Feb. 26.
In addition, the deal includes a call/put option allowing the buyers to acquire the remaining Liberty Health shares, which are subject to the Canadian Securities Exchange's mandatory escrow requirement.
The buyers would be able to buy the remaining shares at an 18% discount to the market price as they become freely available in tranches, with escrow conditions completely removed by the middle of 2020.
Under the deal, Aphria's CEO Vic Neufeld and director John Cervini would remain on Liberty's board, with Neufeld continuing as the chair of the board. Liberty will retain the right to continued use of Aphria's trademarks.
The deal is subject to receipt of all required approvals from the Florida Department of Health Office of Medical Marijuana Use.
Aphria said the divested shares had originally cost 23.4 Canadian cents per share, resulting in a gain of about C$27 million.
