Tuesday, January 8, 2019

The Flowr Corporation (TSX.V: FLWR) (OTC: FLWPF) Identifies Acquisition of Stake in Holigen as ‘Transformative Transaction’

  • Vinay Tolia, co-CEO of Flowr, sees the move as giving the company exposure to European and Australian markets
  • The company believes that the combination of its cultivation expertise with Holigen’s development of large-scale cannabis facilities could result in one of the lowest-cost producers worldwide
  • Clarus Securities has initiated coverage on FLWR stock with a ‘speculative buy’ rating and a one-year price target of $5; its research report projects adjusted EBITDA of C$6.8 million in FY2019
The Flowr Corporation’s (TSX.V: FLWR) (OTC: FLWPF) acquisition of 19.8 percent of Holigen Limited for a cash payment of C$6 million and the signing of an intellectual property sharing agreement is expected to have far-reaching benefits for the company. Flowr says that it will result in an acceleration of Holigen’s projects, including an outdoor cultivation license on a seven million square foot site in Portugal with the potential to produce 500,000 kg of cannabis products annually (http://nnw.fm/iv7Wk).
Flowr, through its subsidiaries, is a vertically integrated Canadian cannabis company and licensed producer that focuses on non-irradiated premium flower production. Its headquarters are in Markham, Ontario; and its production facilities are in Kelowna, British Columbia. Using its patented growing systems, it conducts large-scale cultivation operations built to Good Manufacturing Practice (GMP) standards. It is also well positioned to serve the adult use market with a line of premium cannabis products.
Based in Portugal and Australia, Holigen is forming partnerships with cannabis distributors in Germany, Poland, the United Kingdom and Ireland. It also has strong ties to the largest medical cannabis distributor in Australia. The company is in the final stages of obtaining a license to export cannabis from Portugal, giving it potential direct marketing access to the European Union and other global markets.
“We believe this is a transformative transaction that establishes Flowr as a global player in the cannabis industry,” CEO Vinay Tolia of Flowr stated in a news release. “We’re using our financial strength and industry-leading cultivation expertise to gain exposure to the rapidly expanding European and Australian markets through Holigen.”
FLWR is focused on high-yield production and believes that Holigen’s outdoor production site in Portugal could offer one of the lowest cost cannabis cultivation opportunities globally, given Portugal’s ideal climate and relatively low land and labor expenses, as well as Flowr’s cultivation expertise. Holigen is currently developing four cultivation facilities in Portugal and Australia along with production and research and development sites.
Holigen expects to complete licensing for its first site in Portugal by the middle of 2019 and plans to be one of the few licensed companies in Europe producing products in GMP-compliant facilities.
Flowr is receiving coverage from Clarus Securities. In a research note to investors, Noel Atkinson, analyst at Clarus, projects that Flowr will grow to adjusted EBITDA of C$6.8 million in FY2019, as he stated in the Cantech Letter (http://nnw.fm/95zmJ).
For more information, visit the company’s website at www.Flowr.ca
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