Voyager Life plots merger with Seed Innovations investee company Northern Leaf

Aquis-quoted cannabidiol products supplier Voyager Life (LON: VOY) has revealed plans to merge with Northern Leaf, which had planned to join AIM late last year. This should value the combined group at £5m – the Voyager Life share price is unchanged at 11p – if deferred consideration is paid in full. That requires Northern Leaf to generate revenues of more than £5m by March 2025.

Jersey-based medical cannabis supplier Northern Leaf was the second company to be awarded a UK commercial high THC licence – the other was former AIM company GW Pharmaceuticals. Prior to 2023, the company had raised £16m over three years. Northern Leaf raised £3m in pre-IPO cash via a preference share issue in April 2023, followed by at least £1m raised via a loan note with the right to convert into shares at a discount to an AIM flotation price.

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Voyager Life is offering 10 million shares for Northern Leaf, plus up to 2 million shares if the individual shareholders do not sell within six months. The deferred consideration of up to 21.9 million shares is split into two tranches. If revenues are more than £2m, the 10.95 million shares will be issued, while the rest will be issued based on how near to £5m the revenues end up.

AIM-quoted investment company Seed Innovations (LON: SEED) owns 0.55% of Northern Leaf. It invested £600,000 in a convertible loan note in 2021 and converted this into shares in April 2023. That stake had been valued at £960,000 before being reduced to £444,000 last September and then to £13,000. The merger values the stake at £5,000. The Seed Innovations share price is unchanged at 2.05p because it has already taken most of the hit.  

In May 2023, Northern Leaf received Good Manufacturing Practice accreditation from the UK’s Medicines and Healthcare Products Regulatory Agency for its flower product as an active pharmaceutical ingredient. The following month the company gained accreditation for its 100,000 square feet cultivation facility in Jersey. The facility has the capacity to deliver nine tonnes of cannabis flower each year. There are already customers.

Because of the poor financial state of Northern Leaf, the Takeover Code requirements have been waived. Voyager Life will require more cash for the deal to go through. Stanford Capital and SI Capital are the brokers.

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