Cannasouth proposes to buy competitor Eqalis in $48.8 million deal

Medicinal cannabis firm Cannasouth is proposing to buy Bay of Plenty-based competitor Eqalis for $48.8 million, in a deal that their executives say will improve patient access to cannabis products.

The hashing of the two companies is said to be a 50:50 merger, where they will share resources for research and development, sales and prescriptions.

“Both Cannasouth and Eqalis share the same values when it comes to delivering positive health outcomes to patients. Through collaboration, we can speed up the advancement of technology to bring medicines to market faster.” Cannasouth chief executive Mark Lucas said in a statement.

“Together, Cannasouth and Eqalis will have greater ability to lead and shape the New Zealand industry and reduce costs to patients.”

Eqalis has a Medsafe licence to grow cannabis in Katikati and was granted a commercial licence in 2020.

Cannasouth said in an NZX release in October that it had received its first shipment of imported and verified medicinal cannabis products.

The companies said they would sell products such oil tinctures and “next generation pharmaceuticals”.

“We know the most significant barrier to medicinal cannabis for many Kiwis is affordability,” Eqalis chief executive Greg Mission said.

“As a combined entity, we’re investing in diversification and eliminating duplication to lower the price of medicinal cannabis for patients.”

Eqalis managing director Greg Misson in the growing room at its medicinal cannabis research facility. Photo / Andrew Warner

The proposed merger would see Cannasouth acquire 100 per cent of the shares in Eqalis, paid for by issuing equity in Cannasouth to Eqalis’ shareholders, valued at 33 cents per share.

Lucas would remain Cannasouth CEO, while Mission would become chief innovation officer.