Hill Dickinson advises Sativa Group on takeover by Stillcanna Inc, the first public takeover of a UK company operating in the medical cannabis and CBD wellness sector

Hill Dickinson’s Corporate team has advised Sativa Group plc, the UK’s leading quoted CBD wellness and medicinal cannabis group, on the recommended share-for-share offer by Stillcanna Inc. The transaction represents the first public takeover by a Canadian-listed entity of a UK company operating in the medical cannabis sector.

Hill Dickinson first acted for Sativa Group in respect of its admission to the NEX Exchange Growth Market (now the Aquis Exchange Growth Market (AQSE)) in March 2018. That listing was the first listing of a medical cannabis-focused company in the UK since 1998 (GW Pharmaceuticals). Since its initial admission to AQSE, Sativa Group completed a series of acquisitions moving from being an investment company to the holding company operating five separate businesses in the CBD wellness sector, including the operation of online and physical retail stores selling CBD products, analytical hemp and CBD testing, and the distribution and manufacturing of THC medicinal cannabis for research purposes.

Stillcanna Inc, a Canadian company listed on the Canadian Securities Exchange (CSE), whose securities are also quoted on the OTC in the United States and the Open Market of the Frankfurt Stock Exchange, is a leader in cannabinoid extraction and agriculture that is focused on the large-scale manufacturing of CBD in Europe. It has built two high-volume extraction facilities, positioning itself as a leader in seed to CBD supply. The merger of Sativa Group and Stillcanna will create a fully integrated ‘seed to consumer’ CBD wellness group.

The highlights of the transaction are as follows:
•    The acquisition of Sativa Group by Stillcanna was implemented by way of scheme of arrangement with the scheme becoming effective on 24 September 2020 and re-listing of the enlarged group on the CSE occurring on 30 September 2020 under the name Sativa Wellness Group Inc.
•    The consideration for the sale of Sativa Group shares was the issue of 0.33507 Stillcanna shares for every one Sativa Group share in issue, such consideration shares representing approximately 65% of the entire issued and to be issued share capital of the enlarged group following completion, and a deal value in excess of £10.6m. 
•    The transaction constituted a fundamental change of business for Stillcanna pursuant to the policies of the CSE and therefore required a re-listing process in Canada to be completed alongside the scheme of arrangement in the United Kingdom.

Concurrent with the relisting of the enlarged group on the CSE, Sativa Wellness Group’s shares have also been admitted to trading on AQSE, maintaining the availability of a UK stock market for shareholders. In connection with the admission to AQSE, Hill Dickinson provided regulatory advice to the enlarged group in order to satisfy the requirements of the AQSE regarding the Proceeds of Crime Act 2002 and the Misuse of Drugs Act 1974.

The transaction represents another first for Hill Dickinson in the medicinal cannabis space having completed the first medical cannabis investment by an AIM company (FastForward Innovations), also the first Guernsey company to invest in medical cannabis), advising Sativa Group on the first IPO of a medical cannabis company since 1998, advising Sapphire Medical Clinics, the first operator of CQC approved medical cannabis clinics in the UK, and now advising Sativa Group on the first public takeover of a UK medical cannabis company.

The Hill Dickinson team advising Sativa Group plc on the takeover was led by senior associate Sam Hudson and partner Shantanu Sinha, with assistance from associates Laura Scott and Paul Jackson. In addition, senior associate Jack Delaney and associate Natalia Fryda provided regulatory advice in connection with the admission of the enlarged group’s shares to trading on AQSE. 

Commenting, Henry Lees-Buckley, chief executive officer of Sativa Group, said:
“We are thrilled to have completed the process of combining Sativa Group and Stillcanna to form a leading European CBD Wellness company. Discerning consumers demand very high quality and compliant products and we believe the best way to ensure the company is able to fulfil this demand is to have management control throughout the entire production, manufacturing and distribution supply chain. The Hill Dickinson team’s assistance was integral to the success of the transaction and we are incredibly grateful to Sam Hudson and Shantanu Sinha who helped to guide use through the transaction with a commercial and diligent approach. We look forward to working with the Hill Dickinson team again as we move into this new chapter for the Sativa Wellness Group.” 

Commenting for Hill Dickinson, Sam Hudson said:
 “The growth of the CBD wellness market in Europe has made it a very attractive proposition for Canadian companies looking to invest, which makes it a hugely exciting space for Hill Dickinson’s life sciences team to be operating in.

“We have acted for Sativa Group since early 2018, advising it on the first listing of a medical cannabis and CBD wellness-focused company in the UK since GW Pharmaceuticals in 1998. This latest deal brings Sativa and Stillcanna together in a merger to create a fully integrated ‘seed to consumer’ CBD wellness group. We are delighted to have worked with the Sativa management team to help make this happen.”