Silo Wellness of Canada has announced plans to acquire NUGL Inc, which includes the Kaya ganja assets in Jamaica, in a deal valued at CDN$43.29 million or $4.8 billion in local currency.
The share price of both entities increased 53 per cent at one point in morning trading Tuesday, following the announcement. Silo’s shares were then halted.
The announcement deepens the partnership agreement announced earlier in August between both entities.
Kaya CEO Balram Vaswani held 23 per cent of NUGL up to June. He did not respond to requests for comment on what the deal implied for Kaya and its chain of herb houses in Jamaica.
Silo said it will seek wider shareholder approval at its upcoming annual and general special meeting. It is also contemplating a change of the Kaya/NUGL name.
The transaction price is more than four times the US$9 million market capitalisation of NUGL on the US-based Over-the-Counter exchange.
In the June quarter, NUGL made a profit of US$44,100 on revenue of US$709,000. This compared to losses in the past for the company, which is still in its development stages.
In 2022, Kaya generated revenue of US$2.2 million, up 22 per cent year on year. One-off costs, however, led it to post a US$2.7 million loss.
The global psychedelic drug market is estimated to grow by half from US$3.7 billion in 2021 to US$5.7 billion in 2027, according to Psychedelic Drugs Global Market Report 2023 published by Research & Markets, a leading data provider.
Jamaica now has several medical marijuana retail operations, but Kaya was the first to launch into business and it’s the only company whose financials are publicly available.
The transaction announced Tuesday by Silo will see the Canadian company acquiring 100 per cent of the issued and outstanding shares of NUGL in exchange for 2.01 billion shares, valuing that element of the transaction at CDN$40.2 million. Then Silo Wellness will issue common shares in a private placement financing to raise CDN$250,000 to CDN$2 million at US$0.02 per share. Third, Silo will issue a 3.0 per cent finder’s fee to be paid to NUGL board member Benjamin Kaplan and 3.0 per cent to Silo CEO Mike Arnold for a total of 64,934,437 shares issued to each, the statement indicated.
Both Silo and NUGL trade on the Over-the-Counter markets, but Silo also trades on the Canadian Securities Exchange, CSE, and the Frankfurt Stock Exchange.
“The CSE is likely to keep the stock halted until such shareholder decision due to the size of the transaction, the change of control, and the definition of fundamental change under the rules,” said Silo in its market filing.
Earlier in August, Kaya and Silo enacted a share-swap agreement to facilitate offering magical wellness retreats on the island. The partnership combined Kaya’s three Kaya retail herb houses and Gap Caf? wellness centre operations with Silo’s expertise in managing psilocybin mushroom wellness retreats in Jamaica’s legal psilocybin market. Under the terms of that agreement, Silo Wellness acquired 25 million shares of NUGL, which holds Kaya assets.
In March 2018, Kaya opened its first herb house in Drax Hall near Ocho Rios, in walking distance from its cultivation and processing operations. It opened its second herb house in February 2019 in Falmouth, a third in December 2019 at Lady Musgrave Road in Kingston. The wellness centre at The Gap Caf? in the Jamaican Blue Mountains opened in December 2022.
Kaya’s merger with the ganja search engine and marketing company NUGL took effect in April 2022.