Cannasouth Limited (NZSE:CBD) entered into an agreement to acquire 60% stake in Midwest Pharmaceutics NZ Limited for approximately NZD 1.3 million on October 1, 2019. The purchase price is subject to adjustment during the month following settlement date, on finalization of the financial position of Midwest as at the date of settlement. Under the terms of the transaction, purchase price shall be satisfied through the payment of NZD 0.8 million in cleared funds on the date of settlement; and the issue of 0.86 million new ordinary fully paid shares in Cannasouth. In the event of an adjustment to the purchase price, an adjustment will be made to the number of shares to be issued to the vendors. The vendors have agreed that the new Cannasouth Shares issued as part of this transaction shall be escrowed for a period of 12 months from the date of their issue. Cannasouth shall have a call option to acquire half of the vendors remaining shares in Midwest anytime during the period between January 1, 2023 and June 30, 2023, and shall have a further call option to acquire the balance of the shares held by the vendors during the period between January 1, 2025 and December 31, 2025. In conjunction with the two call options, the vendors shall have a put option whereby they may require Cannasouth to purchase the remaining shares held by the vendors in Cannasouth during the period between January 1, 2025 and December 31, 2025. As part of Mark Balchin’s remuneration package with Cannasouth for his role as Chief Manufacturing Officer, Cannasouth will issue Mark Balchin 0.3 million options to acquire shares in Cannasouth pursuant the Cannasouth Employee Share Option Plan. The exercise price for those options shall be 60 cents per option exercised. The options shall vest in three equal parcels over three years and shall have a maximum term of four years. The transaction has been funded from Cannasouth’s recent IPO. For the year ended March 31, 2019, Midwest Pharmaceutics NZ Limited reported revenues of NZD 1.8 million. Midwest Owner and Chief Executive Mark Balchin will continue as the Chief Executive Officer of Midwest and will also be appointed by Cannasouth as its Chief Manufacturing Officer following completion of the transaction. The transaction is subject to the satisfaction of the conditions precedent including the parties receiving all approvals and consents from the landlords to the premises which Midwest utilizes, and from those counterparties to certain business contracts, which contracts require the consent to a change in control of ownership of Midwest and the settlement for the transaction is anticipated to occur before the end of October 2019. CM Partners Limited acted as financial advisor to Cannasouth Limited.