SYDNEY: Australian medicinal cannabis company Little Green Pharma Ltd (LGP.AX) said on Monday it has agreed to acquire smaller rival Cannatrek Ltd in an all-stock deal, aiming to create one of the world’s largest pure-play medicinal cannabis firms.
Under the proposed scheme of arrangement, LGP will acquire 100% of Cannatrek’s shares. Cannatrek shareholders will receive 1.835806 new LGP shares plus 0.727502 contingent value (CV) shares for each Cannatrek share held, the companies said in a joint presentation.
The deal implies an initial ownership split of approximately 60.5% for Cannatrek shareholders and 39.5% for existing LGP shareholders, subject to final conversion of the CV shares. The contingent shares provide a mechanism to adjust the final ownership based on the resolution of certain liabilities within six months after completion.
The combined entity is projected to have pro-forma revenue of A$112.3 million ($74.3 million) and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of A$13.0 million for the 2025 financial year, based on the companies’ historical financials.
Strategic Rationale and Synergies
The merger combines two of Australia’s largest medicinal cannabis companies, with LGP citing a strategy of industry consolidation and market rationalisation. The combined group will have vertically integrated operations spanning cultivation, Good Manufacturing Practice (GMP)-certified production, distribution, and clinic networks in Australia and Europe.
Key expected synergies include utilizing Cannatrek’s Australian GMP manufacturing capacity for the local market and LGP’s Danish facility to serve European markets, combining clinic operations, and optimising costs.
“By controlling the chain from ‘Seed to Patient,’ the new entity captures margin at every step, creating a competitive moat that peers cannot bridge without large capital expenditure,” the presentation stated.
Conditions and Timeline
The transaction is subject to customary conditions, including regulatory and court approvals, shareholder votes from both companies, and an independent expert’s report confirming the scheme is in the best interests of LGP shareholders. The Cannatrek board intends to unanimously recommend the deal, pending no superior proposal.
A binding Scheme Implementation Deed was entered into on Jan. 14, 2026. The companies outlined a timeline targeting a first court hearing on March 6, 2026, shareholder meetings on April 10, and an implementation date of May 1, 2026, for the combined entity to begin trading.
Market Context
The presentation highlighted a rapidly consolidating global medicinal cannabis market, where scale, integrated supply chains, and balance sheet strength are becoming critical. It cited projections that Australia’s market will surpass A$1.0 billion in sales by 2026 and noted strong growth in Europe, particularly in Germany following regulatory changes.
LGP brings an export presence in 10 markets, which it said provides an “immediate international highway” for Cannatrek’s products. The merged company aims to leverage its expanded scale to attract institutional investor interest and improve its market valuation.
($1 = 1.5115 Australian dollars)