Summerway to buy medicinal cannabis group Vertigrow

Summerway Capital has agreed to buy Vertigrow Technology, a medicinal cannabis producer, for £80m to take the business public and expand it.

The acquisition vehicle said it would pay for the deal by issuing 48.5m shares at 165p each and lend Vertigrow £4.25m to speed up capital spending at its facility in the Midlands.

Summerway said it would place shares with investors to raise £7m before expenses to provide working capital for the enlarged group. The bid vehicle switched its focus from technology to healthcare and pharmaceuticials earlier in 2021.

Vertigrow grows cannabis for medicinal products to treat pain and has a licence from the UK government to legally grow cannabis for that purpose. Its facility could supply up to 50,000 patients and generate revenue of £90m per annum with earnings before interest, tax, depreciation and amortisation margins of about 50%.

Vertigrow also has a majority stake in a potential private pain clinic business that, on approval, would carry out the only authorised medicinal cannabis trial of its type in the UK, Summerway said.

After the deal completes, James Short, Vertigrow's founder and chief executive, will join Summerway's board as CEO.

Benjamin Short, Summerway's interim chairman, said: "The board of Summerway is delighted to announce the proposed acquisition of Vertigrow and to be partnering with James Short and his team. We believe the pharmaceutical medical cannabis market will be substantial in the UK and internationally and Vertigrow is, in our view, a clear leader in the sector."