Paris-based cannabis company to be bought in $173M deal

Emblem Cannabis, a Paris, Ont. marijuana producer will be expanding.

Aleafia Health Inc. announced a friendly deal to acquire Emblem Corp. in an all-share transaction valued at $173.2 million that will combine the companies' two chains of medical cannabis clinics.

It is expected that existing Emblem shareholders will own approximately a 41.0 per cent stake in the combined company after the transaction, which values Emblem shares at about $1.21 based on closing stock prices for both companies on Tuesday.

The companies say the combination creates a network with access to 40 medical clinics and education centres under the Canabo Medical and GrowWise Health banners.

The agreement requires approval by two-thirds of the votes cast by Emblem shareholders.

Each company has the right to match a superior offer within seven days and the two parties have agreed to reciprocal termination fees of $10 million under specified circumstances.

The offer of 0.8377 of an Aleafia common share per Emblem share represents a 27 per cent premium based on Dec. 18 closing prices at the TSX Venture Exchange.