It appears that Choom Holdings (CSE: CHOO) and Phivida Holdings (CSE: VIDA) are joining forces via a merger in a transaction that is claimed to “strengthen Choom’s leadership position in Canadian cannabis retail.” The transaction is valued at $7.3 million and will be taking the form of an all-share transaction.
The transaction will see Choom acquire Phivida through the issuance of shares, valuing each Phivida share at 0.72566 of a Choom share, effectively placing a value of $0.082 on each unit, a 10% premium to the 20 day volume weighted average share price of the company. The resulting composition of the issuer will consists of 78% Choom shareholders and 22% Phivida shareholders.
The strategic rationale for the deal however, isn’t exactly clear cut. The associated news release for the transaction identifies that the acquisition will “enahnce Choom’s leadership position in cannabis retail”, but it doesn’t exactly say how. Rather, it mentions digital assets that Phivida has without describing it further, as well as branding expertise that will help with a vertically integrated strategy.
These assets are also supposed to accelerate Choom’s national store rollout, but again, the actual details on what benefit Phivida’s assets provide are slim. Based on Phivida’s investor deck, it sells some branded CBD-based food products across several US states, and owns some digital assets for “accessories” as well as a CBD product marketplace. None of which points to strengthening a national store rollout strategy in Canada.
A timeline for the completion of the merger was not provided, and the transaction has yet to be approved by shareholders of Phivida, as well as by the securities exchange.
Choom Holdings last traded at $0.14 on the CSE.
Information for this analysis was found via Sedar, Phivida Holdings and Choom Holdings Ltd. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
