International exit: Farmako becomes part of AgraFlora

Farmako, the Frankfurt-based pharmaceutical wholesale company, will become part of AgraFlora Organics International Inc. of Canada. The listed company (CSE: AGRA / Frankfurt: PU31), the fourth largest producer of cannabis in the world, is acquiring 100 percent of the company shares of "The Good Company GmbH", parent company of Farmako GmbH. The purchase price for the third largest independent wholesaler of medical cannabis in Germany has a volume of 15 million euros.

Farmako was founded at the end of 2018 and has generated €1.6 million in sales in the distribution of pharmaceutical cannabis since its operational launch in March 2019. The company obtained the permits and licenses necessary for trading in February 2019 and has since been able to position itself as one of the leading distributors on the German market. The distribution network includes around 20,000 pharmacies that Farmako can supply with pharmaceutical cannabis. In addition, Farmako has a license in the UK as well as locations in Denmark and Luxembourg.

AgraFlora is the fourth largest producer of cannabis worldwide with 251 tons (projected production capacity for 2020). Farmako will be the exclusive distributor of AgraFlora in Germany and Europe. This creates an integrated value chain of production and distribution, which guarantees the supply of high-quality cannabis to patients in Europe.

Supply of patients in the focus of Farmako
"In Germany there are now almost 100,000 patients who use medical cannabis. Their supply is our primary goal. We have now found a very strong partner in AgraFlora: The combination of their cultivation capacities and our distribution network ensures full vertical integration and enables a smooth supply of pharmaceutical cannabis in the future," says Katrin Eckmans, CEO of Farmako GmbH.

AgraFlora sees great potential in Germany and Europe with the acquisition
Brandon Boddy, Chairman and CEO of AgraFlora: "The medical cannabis market opportunity in Germany has been an integral part of AgraFlora's global growth strategy from the beginning. We have long ranked Germany as one of the most exciting medical cannabis markets in the world due to advanced regulations, a rapidly growing patient population and insurance coverage for over 60 percent of prescriptions - the acquisition of Farmako reinforces our thesis. The merged entity will be equipped with world-class production facilities and a strong distribution network, and will thrive in the European market."

Proceeds from sale via shares and cash
"We have decided on the best possible option from various options available, such as a financing round and a pure cash sale. We consider AgraFlora's share price to be undervalued and are convinced of a positive development. The combination of share swap and cash gives us, as founders and shareholders, many chances to further increase the proceeds of the sale", says Sebastian Diemer, founder of Farmako.

The total volume of the exit is at least 15 million euros and consists of a share swap and cash. The majority of the sale proceeds will flow to the founders and shareholders of Farmako GmbH via shares in AgraFlora. Farmako will continue to exist as a company after the sale. AgraFlora replaces shareholder loans and provides Farmako with fresh capital.

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