HAPA was only incorporated last year following Germany's decision to legalize cannabis use in March. Early mover advantage in a potentially huge German market could generate significant upside for the newly formed European Cannabis Corporation, of which the HAPA founders will become major shareholders.
The acquisition will cost 1PG A$2m cash and 90m shares @ 16.5c (A$16.85m equivalent value). Considering 1PG's tight capital structure and cash reserves, IMO the HAPA founders are getting a pretty sweet deal (two directors on the board, 37% ownership and access to A$23m cash to invest and grow the business). As for existing 1PG shareholders, the potential upside here will easily compensate for any dilution caused by the acquisition.
This is a win/win IMO and could bounce hard upon relisting based on hype alone.
1PG Price at posting:
16.5¢ Sentiment: Buy Disclosure: Not Held
