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27 March 20228 minute read

DLA Piper advise Canaccord Genuity on Summerway Capital Plc's AIM listing

DLA Piper has advised Canaccord Genuity Ltd as Nominated Adviser and Broker to Summerway Capital plc (to be renamed Celadon Pharmaceuticals plc) on the acquisition of Vertigrow Technology Ltd (Vertigrow), for a total consideration of GBP80 million, constituting a reverse takeover for the purposes of the AIM Rules for Companies. Vertigrow is a UK-based pharmaceutical company focused on the researching, growing and supply of medicinal cannabis. As part of the acquisition, Celadon has also raised GBP8.5 million by way of a placing and subscription of shares to certain institutional and other investors.

The acquisition provides Celadon with a compelling foundation from which complementary M&A opportunities could be executed alongside Vertigrow’s existing organic growth initiatives. The proceeds from the fundraising will be used to fund the enlarged group’s working capital requirements.

Summerway Capital plc (the Company) was admitted to trading on AIM in 2018, with the strategy to acquire companies or businesses which had the potential for strategic, operational and performance improvement opportunities in the wider household and consumer goods sector. The Company's shares were suspended from trading on the AIM market on 21 September 2021, when the Company announced it was in discussions with an immediate opportunity in the healthcare and pharmaceutical sector, namely Vertigrow. The Company's shares were restored to trading on AIM at 7.30 a.m. on 28 February 2022 following the publication of an Admission Document describing the Company and its proposed acquisition of Vertigrow.

On 25 March 2022, the Company announced that the acquisition of Vertigrow was complete following the passing of shareholder resolutions to approve, among other things, the acquisition as a reverse takeover under the AIM Rules for Companies and the change of the Company’s name to Celadon Pharmaceuticals plc.

Following completion of the acquisition, the Company has ceased to be an investing company under the AIM Rules for Companies and has become an operating company focused on the researching, growing and supply of medicinal cannabis. Trading is expected to recommence in the Company’s shares at 8.00 a.m. on 28 March 2022.

Vertigrow is one of the first pharmaceutical companies in the UK to receive a Home Office licence, following approval from the MHRA to apply for the licence, to grow high tetrahydrocannabinol (THC) cannabis, which is expected to be used in medicinal products, initially focusing on the chronic pain market. At full capacity, Vertigrow’s current facility could supply up to 50,000 patients, which has the potential to generate revenue of GBP90 million per annum.

The DLA Piper team was led by Corporate legal director Karin Kirschner and senior associate and Co-Head of the firm’s Global Cannabis Practice, Dylan Kennett. The team also included Corporate partner Martin Penn, Corporate associate Alex Potop, partner Laura Ford on Financial Regulatory and partner Richard Taylor on Life Sciences Regulatory.

Karin Kirschner, Corporate legal director at DLA Piper, commented:

“We are extremely happy to have supported the Canaccord Genuity team on this transaction, especially as the sector continues to grow and become more significant in the UK and internationally. Drawing on our extensive equity capital markets experience, and with the deep sector knowledge of our Global Cannabis Practice, we were able to assist with the process of the AIM listing and to address all legal and regulatory issues. We are pleased to see that the London markets are gradually opening up for life sciences businesses in this exciting sector after a period of uncertainty.”

Bobbie Hilliam, on behalf of Canaccord Genuity, Nominated Adviser and Broker, said:

“The support we have received from DLA Piper has been invaluable, both in relation to equity capital market advice and the Cannabis sector. DLA Piper were able to provide regulatory guidance on this emerging sector, providing comfort to Canaccord as Nominated Adviser and Broker as well as existing shareholders and incoming investors. This transaction starts an important journey for Celadon as the first Cannabis company to IPO on AIM since GW Pharma. We look forward to working with DLA Piper further, both alongside Celadon and on similar transactions both within the cannabis sector and the broader pharmaceutical sector.”

Dylan Kennett, Corporate senior associate and Co-Head of the Cannabis Practice at DLA Piper, commented:

“DLA Piper’s deep experience of the worldwide cannabis market has allowed us to support Canaccord Genuity with this reverse takeover by Summerway. The size and significance of the medicinal cannabis sector continues to grow in the UK. Celadon is a clear leader in the sector and is in fantastic position to take full advantage of such growth. We are incredibly happy for the Summerway and Celadon teams, as well as Canaccord – it is truly a best in class transaction and testament to a lot of hard work on everyone’s part."