Aleafia Health Inc. and Red White Bloom Brands Inc. RWBYF have entered into a binding letter agreement, whereupon Red White Bloom RWB will acquire Aleafia and its subsidiaries in a share-exchange agreement.
Under the terms of the agreement, each outstanding common share in Aleafia's capital will be exchanged for 0.35 of a common share in RWB's capital, subject to customary adjustments. RWB shareholders are expected to own approximately 76% of the combined company resulting from the proposed transaction. Aleafia shareholders are expected to own about 24% of the combined company.
The intended acquisition of Aleafia expands our footprint to the largest federally legal cannabis market globally, said Brad Rogers, CEO and director of RWB. Aleafia's proven harvesting, manufacturing and distribution capabilities, combined with the award-winning brands and IP, creates one of the most dynamic cross-border firms in the industry. We continue to concentrate on delivering substantial value to our shareholders and believe this transaction is in line with that commitment. Aleafia CFO Matt Sale said the deal would recapitalize Aleafia's balance sheet and provide our shareholders with access to a larger market capitalization and exposure to the U.S. recreational and medical cannabis markets. Eddie Mattei, CFO of RWB, called the potential acquisition a milestone for RWB.
RWB's potential acquisition of Aleafia is a transformative step that will propel the company to new heights.