In a move that appears to be in-line with the company’s strategy to develop products for testing and identifying cannabinoid isolates for targeted therapeutic purposes, Vinergy Resources (VIN.CN: CSE) (VNNYF: OTC) signed a binding letter of intent to acquire 65% of Biolennia Laboratories.
The company’s lab operates out of a secure premise in Toronto alongside Micrylium, which manufactures products registered under licensure from various agencies.
Under the terms of the acquisition, Vinergy will acquire 65% of Biolennia for $260,000 CAD and 150,000 shares of Vinergy at the time the agreement is signed. The acquisition is expected to close during the first quarter and we see several synergy opportunities between the two companies.
What Does and Will Biolennia Do?
Biolennia is a specialty development laboratory with expertise in microbiology and chemistry. The lab currently provides testing, R&D and quality control services for Health Canada registered and approved industrial disinfectants and other consumer products on behalf of Micrlylium.
The lab is in the process of applying for a Dealer’s License from Health Canada and the issuance of this license will be a milestone for the company since it would be allowed to process cannabis for R&D purposes.
Biolennia will provide a host of drug testing services to support MJ BioPharma’s product line, product formulation, extraction facilities, systems design, and development of standard-operating-procedures (SOPs).
Biolennia has in-house expertise when it comes to the methods accepted by Health Canada as well as the FDA for determining the purity and quality of many of the materials and methods used in validating cannabis and or testing cannabis products.
Terminates European Plant Breeder Agreement
Concurrently with this announcement, Vinergy terminated its letter of intent announced on February 2nd to acquire up to 51% a European plant breeder. The target company of this terminated agreement had $14+ million in annual sales and adjusted EBITDA $2+ million last year.
The company it would have acquired has a long history of providing customers various commercial agriculture services and shipped over 35 million plant products during 2016.
Although this deal is off the table for now, we think there is still an opportunity in this area since Vinergy could help them or a competitor expand into the hemp, cannabis and cannabinoid (CBD) market across Europe.
From the CEO
MJ BioPharma CEO Kent A. Deuters said, “This is a fantastic acquisition for us and supports our entire product line and R&D initiatives moving forward. Our technical expertise in drug testing, extractions, and formulas containing CBD, Terpene, THC and other botanicals is continually being furthered. We have a remarkable team. We feel strongly that science based products formulated from extracts and derivatives that are properly dosed and manufactured in GMP environments to ensure consistency and safety for all customers whether they be recreational or medical users, is the future of the cannabis industry.”
Outlook
Although we were favorable on the agreement with the European plant breeder, we feel that this development is significant and fits with the company’s current strategy. We will monitor how the market responds to this development and will provide updates on any significant price movements.
This move falls in-line with the strategy to develop products for testing and identifying cannabinoid isolates for targeted therapeutic purposes and see value on weakness.
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