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Major Australian medical cannabis group Zelda Therapeutics (ASX: ZLD) has announced a landmark merger with America's Ilera Therapeutics.
While the companies have been partners in manufacturing and distributing cannabis products for some time across Australia and the US, the newly merged Zelira Therapeutics has its sights set on global domination.
The all-scrip transaction includes an approximate $8.86m upfront payment, but the bulk of the transaction will come through more than 725 million performance rights.
If those performance rights were based on yesterday's closing share price the total transaction would be worth $65.4 million. If those rights are met Ilera will own 50 per cent of Zelda in return for its mutual acquisition.
Zelda's expertise in the cannabis space is research and product development to treat sleep conditions, autism, opioid reliance and cancer.
Ilera's wheelhouse is similar but adds more focus in the treatment of anxiety and pain, with a strong pipeline of formulations and technologies that are being developed for specific conditions.
Zelda chairman Harry Karelis says the merger will help both companies cut through a heavily regulated global market.
"The merger will create one of the world's leading medicinal cannabis companies with a rich pipeline of clinically validated products under the development and unique access to the world's largest and fastest growing cannabis markets," says Karelis.
"As markets for medicinal cannabis become increasingly regulated, our strategy of undertaking robust clinical trials to validate and differentiate our products is being recognised as being at the forefront in this sector."
Zelira Therapeutics now plans to grow its footprint within many of the world's key cannabis markets.
Ilera provides direct access to the USA, where there are currently more than four million registered patients, and Zelda provides complementary access to fast growing markets including Australia, Germany and the United Kingdom.
"Our ability as a merged company to immediately capture growth opportunities in the rapidly expanding global medicinal cannabis market will be significantly enhanced," explains Ilera Therapeutics' chairman Osagie Imasogie.
"Ultimately, our objective is to deliver high quality, clinically validated products and options to patients and physicians."
Under the merger agreement, the board of Zelira will consist of three members from Zelda and three from Ilera, including chairmen Imasogie and Karelis.
Zelda's founder and current director Mara Gordon (pictured) will step down from the board once the merger has been approved, however will remain on an advisory board to Zelira.
ZLD shares are trading up 6.41 per cent at $0.083 at the time of writing (10:59am AEDT).
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