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Rua Bioscience Limited (NZX: RUA) Rua to Accelerate Growth with Proposed Acquisition of Zalm

Tuesday 30th November 2021

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Rua Bioscience (NZX: RUA ) has entered into an agreement to acquire 100% of Zalm Therapeutics Limited (Zalm), a New Zealand-based medicinal cannabis company, who has Australia’s leading listed medicinal cannabis company, Cann Group (ASX:CAN) as one of its key shareholders and partners. Rua is acquiring Zalm for $10m equity value through the issue of new Rua shares at approximately $0.41 per share. Rua anticipates completing the acquisition in late January 2022, subject to necessary Rua shareholder approval.

Rua Chairman, Trevor Burt, says "combining speed to market with long-term preferential access to substantial volumes of competitively priced product will enable the company to build a meaningful market presence faster and with a greater economy of scale than our current capacity or that of any other New Zealand medicinal cannabis company. This will significantly reduce pressure on revenue.

"Critically, the deal complements Rua's existing kaupapa by building Rua’s market position earlier and ahead of our competitors. This in turn will enable greater commercial opportunity for the world-class cultivation and production that will come from Te Tairāwhiti.

“In essence, this deal will accelerate our revenue generation, offering further stability to our local operations, enabling the expansion of our local grower partner programme and fostering our long-term aspirations for local job creation".

Zalm Chairman and former Air New Zealand CEO, Rob Fyfe, says the team is excited about the potential of the deal. Rua’s acquisition of Zalm will create what he describes as New Zealand’s premier medicinal cannabis company.

“We reviewed the New Zealand market to see who best to work with. When we looked at Rua Bioscience, we saw a unique and deeply-held kaupapa, and an experienced and capable team that will accelerate rapidly through Zalm's partnerships with Cann Group and Atlantis Healthcare. We believe this is a fantastic deal, and we are thrilled to have this opportunity to move forward with Rua.”

Transaction Terms and Funding

Rua Bioscience has entered into a conditional agreement to acquire Zalm for $10m equity value ($8.5m enterprise value net of Zalm cash). 100% of the agreed purchase value will be satisfied through the issue of new Rua shares at approximately $0.41 (based on 60-day VWAP) with $3.3m paid on completion and remaining consideration paid in equal instalments ($3.3m) conditional on Zalm achieving critical production, pricing and regulatory milestones during the period 2022 to 2024. Assuming all milestones are achieved, Rua would ultimately issue 24,420,000 new Rua shares to Zalm shareholders. $1.0m of Zalm cash is available to Rua immediately on settlement with ~$0.5m held in escrow pending achievement of at least one of two milestones.

Shareholder Approval

The issue of shares for this transaction is subject to approval by Rua’s shareholders by way of ordinary resolution, requiring a simple majority of the votes of those shareholders eligible to vote and voting. Rua intends to hold a virtual Special Shareholders Meeting in mid-January 2022 for this purpose. Further details will be included in the coming Notice of Meeting, expected to be sent out to Rua shareholders around mid-December.

For further information regarding Zalm and the proposed acquisition, please refer to the Investor Presentation that accompanies this NZX Announcement.

Please see the links below for details

Rua to Accelerate Growth with Proposed Acquisition of Zalm

Rua Investor Presentation

Source: Rua Bioscience Limited



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