Village Farms International has completed the acquisition from Emerald Health Therapeutics of 36,958,500 common shares of Pure Sunfarms owned by Emerald, representing approximately 41.3% of the issued and outstanding common shares of Pure Sunfarms (the "Pure Sunfarms Transaction"). With the completion of the Pure Sunfarms Transaction, Village Farms now owns 100% of the common shares of Pure Sunfarms. The acquisition of the Pure Sunfarms shares will be immediately accretive to Village Farms' net income.
"Village Farms conceived of a joint venture to launch its Canadian cannabis business, and the result, Pure Sunfarms, is now one of the leading Canadian cannabis companies. With this transaction, our shareholders will now fully benefit from our initiative," said Michael DeGiglio, CEO, Village Farms. "Pure Sunfarms is well positioned for long-term growth as one of what we believe will be just a small number of major suppliers to the Canadian cannabis market. Importantly, as part of the Village Farms organization Pure Sunfarms can now pursue additional opportunities to further leverage its success to date and increase its earnings potential. I am pleased to welcome the outstanding management team and employees of Pure Sunfarms to our organization, and welcome back so many Village Farms' personnel who transitioned to our cannabis venture in the early days to ensure that Pure Sunfarms would benefit fully from Village Farms' decades of experience and site-specific operational expertise. Pure Sunfarms' CEO, Mandesh Dosanjh, and his entire team have done exceptional work in bringing Village Farms' vision to reality, and we look forward to their continued contribution to its success as part of Village Farms going forward."
"The acquisition of the entirety of Pure Sunfarms is a defining moment for Village Farms, furthering our transformation to a vertically integrated, plant-based consumer packaged goods company. It allows us to fully leverage the invaluable cannabis expertise Village Farms has gained in combination with the organizational strength underlying the Village Farms produce business to pursue high-growth opportunities in emerging legal cannabis and CBD markets in the United States and targeted markets internationally. We will do so with the same thoughtfulness, prudence, strategic decision making and focus on near-term profitability and long-term return on invested capital that has been fundamental to the success of our investment in Pure Sunfarms."
"We especially look forward to the potential for U.S. regulatory changes that would permit us to pursue our U.S. cannabis aspirations. With one of the largest greenhouse footprints in the U.S., located in one of the best regions for growing in the country, alongside our cannabis success in Canada, we believe there is no company better positioned for long-term success in the U.S. cannabis industry. We are ready to move quickly and aggressively as soon as the regulatory environment permits."
Upon closing of the Pure Sunfarms Transaction, Pure Sunfarms will be fully consolidated in Village Farms' financial results. Village Farms will report its third quarter financial results and the third quarter financial results of Pure Sunfarms on November 13, 2020. Village Farms' financial results for the three and nine months ended September 30, 2020 will continue to reflect Village Farms' 58.7% ownership of Pure Sunfarms as an investment in a joint venture.
Within 75 days of the close, the Company is required to file with the U.S. Securities and Exchange Commission, on Form 8-K/A, historical financial statements for Pure Sunfarms, together with unaudited pro forma combined financial statements of the Company as if the Pure Sunfarms Transaction had occurred on January 1, 2020.
The total purchase price for the Emerald shares of C$79.9 million (US$60.0 million) was satisfied through a C$60.0 million (US$45.0 million) cash payment and a C$19.9 million (US$14.9 million) promissory note due six months from the closing date of the Pure Sunfarms Transaction.
Concurrent with the close of the Pure Sunfarms Transaction, the existing Pure Sunfarms Shareholders Agreement between Village Farms and Emerald has terminated, as has the Delta 1 – Option to Lease Agreement.
Origin Merchant Partners acted as advisors to Village Farms for the Pure Sunfarms Transaction.