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GB Group Ord Shs > CMED shareholders vote "YES" to HIP

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Comment by StrongLongon Jan 16, 2018 5:14pm

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Post# 27371758

RE:CMED shareholders vote "YES" to HIP

StrongLong wrote:
CMED... The Mother Hen To The Golden TSXV.HIP Egg

To the current posters here claiming CMED is nothing without ACB... Here is a quote from the Canaccord study commissioned by ACB regarding CMED takeover. Source can be viewed at link below

https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00025675
Jan 12 2018 20:06:08 ET Material Document(s) PDF 11043 K

Strategic Rationale:

CanniMed generated the 5th most revenue of any LP in their most recent quarter ($4.8MM at 29% sequential growth), with the highest percentage of revenue from extracts in the industry. An acquisition of CanniMed represents the opportunity to solidify an immediate leadership position in the Canadian medical cannabis market based on sales, patients or built-out capacity. CanniMed has over 20,000 active patients, growing at over 4,000 net new patients in the most recent quarter, as well as over 4,200 referring physicians (CanniMed does not purchase patients from aggregators). Scale and geographic diversity are also becoming important factors as LPs seek to negotiate with provinces for rec-market distribution, and CanniMed represents a gateway to the Prairies ~7MM in population. Due to CanniMeds steeply discounted valuation and with modest cost synergies, an acquisition of CanniMed at an illustrative $19.00 per share would be significantly financially accretive to the buyer; illustrative merger models show a range of 12%-20% per share accretion based on street 2019 EBITDA estimates.

CMED is focusing on extracts, which are going to be the largest and most profitable segment of the MMJ industry, and the MMJ market is expected to be larger than the recreational market.

Current CMED shares ~= 25,000,000

Issuance of ~12,500,000 additional shares to aquire Newstrike.

~= 37,500,000 share count after deal closed.

so... effectively 50% dilution to achieve what? Here are links to the investor presentations for both companies.

newstrike.ca/wp-content/uploads/2017/07/Newstrike-Investors-Presentation.pdf
https://s21.q4cdn.com/121834357/files/doc_presentations/2018/01/2018-01-10-Presentation-Deck_FINAL.pdf

HIP has 3000 kg/year production at present, to CMED 7000 kg/year production. HIP has a second "Creemore" facility coming online in the very near term (2018) which will see another 3000 kg/year production. Slated for future expansion to 12000 kg/year.
The real exciting thing is their third development, Grimsby, retrofits to begin in Q1 2018 and will produce 12,000 kg/year - slated for expansion to double the output to 24,000 kg/year.

In the short term, CMED will effectively double its production for a 50% share dilution, and in the medium term nearly triple its production as early as 2019. What CMED brings to the table is their expertise in oils, and their network as was demonstrated by Cannacords report.

The CMED HIP deal is a money maker. ACB shares are swollen and the $24 cap screws CMED shareholders. Give me an offer of 4.5 shares without a $24 cap, and the narrative is entirely different.