Decibel Cannabis to acquire AgMedica Bioscience, expanding export potential

October 28, 2024 | Sarah Clark

Calgary-based Decibel Cannabis Company Inc. has closed on its acquisition of AgMedica Bioscience Ltd., a subsidiary of Atlas Global Brands.

The deal comes from an exchange with Callisto Capital Corp for a $6.3 million unsecured convertible debenture. The deal still requires the final approval of the TSX.

The purchase gives Decibel better access to export markets. Decibel projects that AgMedica could contribute $30 million in net revenue and $4 million in EBITDA in 2025, totalling an anticipated $130 million of net revenue and $25 million of adjusted EBITDA in 2025 on a pro-forma basis.

“I am excited to announce the acquisition of AgMedica,” said Benjamin Sze, CEO of Decibel, in a press release. “An EU GMP certification is an international standard that Decibel has been contemplating for quite some time; this acquisition accelerates that timeline.

“The AgMedica facility becomes the cornerstone of our international strategy as it allows us to extend our products and brand to the rest of the world. Furthermore, this marks the first step of Decibel’s new strategy as we execute on profitable growth opportunities enhanced by synergistic and accretive transactions.”

Decibel expects the deal to significantly expand its international footprint by using Agmedica’s EU GMP certification to enable export of flower and various extract products to seven countries, including Australia, Denmark, Germany, Israel, Norway, Spain, and the United Kingdom. This adds EU GMP and IMC-GAP certified annual flower production of 5.1 metric tonnes per annum, which, when combined with Decibel’s GACP facility, expands the total metric tonnes per annum of exportable flower to more than 12.

The deal also includes Decibel’s acquisition of GreenSeal Nursery Ltd., a licensed cannabis nursery.

AgMedica’s parent company, Atlas Global Brands Inc. is currently in a creditor protection process (CCAA). Atlas Biotechnologies Inc. and Atlas Growers Ltd had previously gone into receivership in 2023.

Following completion of the transaction, AgMedica will enter into a five-year industrial lease for the AgMedica facility in Chatham, Ontario, as well as a sale and leaseback agreement with Callisto, pursuant to which specific equipment belonging to AgMedica was transferred to Callisto and leased back to AgMedica for a nominal cost for the term of the AgMedica facility lease. AgMedica has the option to repurchase the equipment at the end of the lease term for a nominal value.

Decibel’s Q3 2024 financial report is expected on or about November 21, 2024, and is projected to have net revenue between $23 to $25 million.