DLA Piper has advised Canaccord Genuity as the nominated adviser and broker to Summerway Capital plc on the acquisition of Vertigrow for a total consideration of £80m in a reverse takeover.
As part of the acquisition of UK-based medical cannabis company Vertigrow, Celadon also raised £8.5m by way of a placing and subscription of shares to investors. Summerway Capital was renamed as Celadon Pharmaceuticals after the listing, which is now the biggest cannabis business to list on the AIM market for several years.
The acquisition provides Celadon with a compelling foundation from which complementary merger and acquisition opportunities could be executed alongside Vertigrow’s existing organic growth initiatives. The proceeds from the fundraising will be used to fund the enlarged group’s working capital requirements.
Corporate legal director at DLA Piper, Karin Kirschner, commented: “We are extremely happy to have supported the Canaccord Genuity team on this transaction, especially as the sector continues to grow and become more significant in the UK and internationally.
“Drawing on our extensive equity capital markets experience, and with the deep sector knowledge of our Global Cannabis Practice, we were able to assist with the process of the AIM listing and to address all legal and regulatory issues.
“We are pleased to see that the London markets are gradually opening up for life sciences businesses in this exciting sector after a period of uncertainty.”
Corporate senior associate and co-head of the cannabis practice at DLA Piper, Dylan Kennett, commented: “DLA Piper’s deep experience of the worldwide cannabis market has allowed us to support Canaccord Genuity with this reverse takeover by Summerway.
“The size and significance of the medicinal cannabis sector continues to grow in the UK. Celadon is a clear leader in the sector and is in a fantastic position to take full advantage of such growth. We are incredibly happy for the Summerway and Celadon teams, as well as Canaccord – it is truly a best in class transaction and testament to a lot of hard work on everyone’s part.”
Summerway Capital was admitted to trading on AIM in 2018, with the strategy to acquire companies or businesses which had the potential for strategic, operational and performance improvement opportunities in the wider household and consumer goods sector.
The shares were suspended from trading on the AIM market on 21 September 2021, when the Company announced it was in discussions with an immediate opportunity in the healthcare and pharmaceutical sector, namely Vertigrow.
Shares were restored to trading on AIM on 28 February 2022 following the publication of an Admission Document describing the company and its proposed acquisition of Vertigrow, and on 25 March 2022, it announced that the acquisition of Vertigrow was complete following the passing of shareholder resolutions to approve the acquisition as a reverse takeover.
Vertigrow is one of the first pharmaceutical companies in the UK to receive a Home Office licence, following approval from the MHRA to apply for the licence, to grow high THC cannabis, which is expected to be used in medicinal products, initially focusing on the chronic pain market. At full capacity, Vertigrow’s current facility could supply up to 50,000 patients, which has the potential to generate revenue of £90m per annum.
The DLA Piper team was led by Corporate legal director Karin Kirschner and senior associate and Co-Head of the firm’s Global Cannabis Practice, Dylan Kennett. The team also included Corporate partner Martin Penn, Corporate associate Alex Potop, partner Laura Ford on Financial Regulatory and partner Richard Taylor on Life Sciences Regulatory.
Bobbie Hilliam, on behalf of Canaccord Genuity, nominated adviser and broker, commented: “The support we have received from DLA Piper has been invaluable, both in relation to equity capital market advice and the cannabis sector.
“DLA Piper were able to provide regulatory guidance on this emerging sector, providing comfort to Canaccord as Nominated Adviser and Broker as well as existing shareholders and incoming investors.
“This transaction starts an important journey for Celadon as the first Cannabis company to IPO on AIM since GW Pharma. We look forward to working with DLA Piper further, both alongside Celadon and on similar transactions both within the cannabis sector and the broader pharmaceutical sector.”