Don't Be Lured By The IAnthus/MPX Merger

Feb. 13, 2019 7:57 AM ETACRGF, CURLF, ITHUF, TCNNF44 Comments
James V. Baker profile picture
James V. Baker
2.7K Followers

Summary

  • The iAnthus Capital Holdings /MPX Bioceutical merger was touted as a first in the cannabis sector.
  • iAnthus and Mpx limped into the merger with poor financial results.
  • The pro forma financial statements reveal major weakness.

iAnthus Capital Holdings Inc. (OTCQX:ITHUF) has captured investor attention because of its recent merger with MPX Bioceutical. It has been called a merger, combination, agreement, arrangement and amalgamation; and, regardless of what it is called, it merits investor attention since it may be a harbinger.

The iAnthus Mpx Deal

On October 18, 2018 iAnthus Capital Holdings Inc. announced that it and MPX Bioceutical Corporation had agreed to enter into a Plan of Arrangement whereby they would merge all operations except for MPX’s international operations. The MPX international operations would be spun out to shareholders of MPX.

The deal closed on February 5, 2019. Pursuant to the terms of the Arrangement Agreement, holders of MPX shares received 0.1673 common shares of iAnthus for each MPX share held, representing a premium of 30.6% based on the closing price of iAnthus and MPX Shares on October 17, 2018. MPX became a wholly-owned subsidiary of iAnthus. iAnthus trades in the United States on the OTC under the symbol ITHUF and on the CSE under the symbol IAN. iAnthus issued 75,795,208 of its shares to MPX shareholders.

Each MPX shareholder also received common shares of newly formed MPX International Corporation (MXPI), which holds all of the non-U.S. cannabis businesses of MPX. MPX shareholders received 0.10 shares of MPX International for each MPX share they owned prior to the amalgamation. A total of 45,304,966 MPX International shares were issued. MXPI trades on the Canadian Securities Exchange, CSE, where it closed at C$0.67 on February 10, 2019.

MPX International is focused on developing and operating assets across the global cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient. Initial key assets include Canveda Inc., a Canadian Licensed Producer, Salus BioPharma Corporation agreement with Panaxia Pharmaceutical Industries Ltd. and 50% of a medical cannabis

This article was written by

James V. Baker profile picture
2.7K Followers
I am the author of Asset/Liability Management (1981) and The Investor's Guide to Cannabis Stocks (2021). After enjoying a successful and varied career as an author, commercial banker, investment banker, city treasurer, investment adviser, NASD arbitrator, consultant, tenured university professor and tennis professional, I retired to South Florida. My academic credentials include having earned a masters degree in Economics and a doctorate degree in Finance. In 1979, I founded a successful nationwide investment banking firm now known as The Baker Group and in the 1980s I had my own family of mutual funds. I am a Contributor to Seeking Alpha which has published more than 80 of my articles. My speeches, tweets, articles, and books on banking, the economy, and cannabis stocks have garnered significant interest from investors worldwide.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Update 2/13/2019: I have changed the article to reflect a more accurate market capitalization calculation for iAnthus.

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