The World's Leading Global Cannabis Producer: Tweed Acquires Bedrocan Cannabis

In this video, I discuss what I believe is one of the most significant events thus far in legal cannabis production, the announced merger of Tweed (TWD/TWMJF) and Bedrocan Cannabis (BED/BNRDF). The combination creates a powerhouse in the legal Canadian MMJ market, and it sets the stage for global expansion into new markets, even the U.S. BNRDF appears to be inexpensive to Tweed. Those that are bullish might consider purchase outright. For those long Tweed already, it may make sense to swap into Bedrocan Cannabis to take advantage of an unusually large discount to the implied deal price, especially if one has a tax-loss that one can realize in Tweed.

Press Release

Tweed to acquire Bedrocan Canada

Transaction Unites Canada's Two Strongest Cannabis Brands, and Establishes World's Largest Publicly-Traded Cannabis Producer

TORONTO and SMITHS FALLS, ON, June 24, 2015 /CNW Telbec/ - Tweed Marijuana Inc. ("TMI" or "Tweed") (TSXV: TWD), operator of licensed cannabis producers Tweed Inc. and Tweed Farms Inc., and Bedrocan Cannabis Corp. ("Bedrocan Canada") (TSXV: BED) are pleased to announce that they have entered into a definitive arrangement agreement, pursuant to which TMI will acquire all of the issued and outstanding securities of Bedrocan Canada. TMI will be renamed at its annual meeting of shareholders to reflect its evolution as a multi-brand holding company. This acquisition marks the beginning of the structured evolution of the Canadian cannabis sector, and it is intended that TMI's portfolio of technologies, brands and geographies will continue to expand.

Tweed and Bedrocan Canada represent distinct market segments that appeal to different consumer needs. To meet market expansion demands, TMI will function as a holding company that is uniquely able to respond to these distinct voices, and will increase its ability to grow market share and diversify client acquisition. Specifically, the Bedrocan Canada brand will be sustained and further supported in establishing its leadership with the clinical and research communities. The Bedrocan Canada division, with its unique focus, will continue to operate separately, though in alignment with the other TMI operating divisions.

Tweed represents industry-leading consumer brand power and production capacity. TMI was the first publicly traded, federally regulated cannabis company in North America and has consistently maintained the largest market capitalization in the industry. Bedrocan Canada represents clinical, scientific and research strength, especially as it pertains to strain genetics and stability, advanced automation in cannabis production, and standardization of active pharmaceutical ingredients. With its Dutch licensor, Bedrocan Canada is the most experienced medical cannabis producer in the world. Uniting Tweed, Tweed Farms, and Bedrocan Canada under TMI creates the organization best positioned to meet diverse consumer needs, engage in clinical research, and build trust with health practitioners and medical regulators.

"We are bringing the two strongest brands in Canadian cannabis under one roof," said Bruce Linton, Chairman and CEO of Tweed. "We will continue to develop and grow the Tweed and Bedrocan Canada brands, focusing on rapidly increasing market penetration for our full line of products. Over 5,000 existing customers will now benefit from having access to products from two producers. For future patients and physicians, the choice will be clear."

"The rationale for and benefits of this transaction are clear, for investors, health professionals, researchers, and most importantly, for patients," said Marc Wayne, President and CEO of Bedrocan Canada. "Tweed and Bedrocan Canada have each helped set the industry standards for professionalism, product quality, dependable supply and exceptional customer care. Together, we will have the largest production and sales capacity in the industry, as well as a broad and complementary product line, and will be capable of allocating additional resources to product research and innovation, as well as to continuous improvement of the customer care experience."

The current consolidated licensed sales capacity of approximately 6,000 kg/yr will ensure that today's customers have access to a consistent supply of cannabis across a variety of product lines, with the potential to reach an even greater number of patients, pending further Health Canada approvals at TMI's three existing facilities. The company will continue to leverage its two state-of-the-art indoor facilities, as well as its greenhouse platform.

Under the terms of the acquisition, Bedrocan Canada shareholders will be entitled to receive 0.4650 common shares of TMI for each common share of Bedrocan Canada held. It is expected that TMI will issue a total of approximately 33.9 million common shares in connection with the acquisition having an aggregate value of approximately $61.0 millionbased on the $1.80 per share closing price of the TMI shares on the TSX Venture Exchange on June 23, 2015.

In connection with the acquisition, TMI will appoint two individuals designated by Bedrocan Canada to the board of directors of TMI. The acquisition is intended to be implemented by way of plan of arrangement and is currently expected to close by the end of August 2015. Closing remains subject to Bedrocan Canada shareholder approval, court approval, the approval of the TSX Venture Exchange, and an amendment to the terms of Bedrocan Canada's license agreement with Bedrocan Beheer BV, among other conditions precedent. Upon closing of the acquisition, Bedrocan Canada will become a subsidiary of TMI.

Additional details of the proposed transaction will be provided to Bedrocan shareholders in information circular to be delivered to them in connection with an upcoming special meeting of shareholders to be held to consider the proposed transaction. The Board of Directors of Bedrocan Canada intends to recommend unanimously that Bedrocan Canada shareholders vote in favour of the acquisition.

The recommendation of the Board of Directors of Bedrocan Canada is supported by a fairness opinion provided to its Special Committee by the Committee's financial advisor Dundee Securities Ltd., to the effect that the consideration is fair to Bedrocan Canada shareholders. PowerOne Capital Markets Limited also acted as a financial advisor to Bedrocan Canada in connection with the transaction. LaBarge Weinstein LLP acts as legal counsel to TMI and Cassels Brock & Blackwell acted as legal counsel to Bedrocan Canada in connection with the transaction. TMI has engaged GMP Securities L.P. to provide a fairness opinion to TMI in connection with the transaction.

Analyst Call

A conference call has been scheduled to discuss the transaction. Bruce Linton, Chairman and CEO of TMI, Marc Wayne, President and CEO of Bedrocan Canada, and Tim Saunders, CFO of TMI will outline the details of the transaction and conduct a Q&A session.

Date and Time: 8:00 am ET, Wednesday, June 24th, 2015

Conference Dial-in: 1.855.859.2056

Conference ID: 72579692

About Tweed Marijuana, Inc.

Tweed Marijuana is Canada's first publicly traded medical marijuana company and the first geographically diversified producer with dual licenses under Health Canada's Marihuana for Medical Purposes Regulations. Through its wholly owned subsidiaries, Tweed Inc. and Tweed Farms Inc., the company operates two state-of-the-art production facilities inOntario and distributes marijuana across the country to Canadian patients managing a host of medical conditions.

The company is dedicated to educating healthcare practitioners, providing consistent access to high quality medication, and furthering the public's understanding of how marijuana is used for medical purposes. www.tweed.com

About Bedrocan Cannabis Corp.

Bedrocan Cannabis Corp. (Bedrocan Canada) is focused on clinical research, technologically-advanced, automated production processes, and innovative product development. Bedrocan Canada and its licensor Bedrocan Beheer BV (Netherlands) are the only companies in the world currently capable of producing standardized full-bud, pharmaceutical-grade medicinal cannabis. Bedrocan Beheer BV has been producing and supplying government-regulated medicinal cannabis for 13 years. www.bedrocan.ca

Management Bios

Bruce Linton, CEO & Chairman, TwEED Marijuana inc.

As the co-founder of Tweed, Bruce’s primary focus has been to position the brand in a competitive market and to raise the capital necessary to fund such an operation. Bruce’s extensive experience as a founder, CEO, and board member across a wide variety of enterprises lends itself well to the success of Tweed, which to date has enjoyed market support for equity raises of approximately $52 million. In addition to his current position at Tweed, Bruce is the CEO of communications company Martello Technologies. After beginning his career at Newbridge Networks Corporation, he has since held positions that include General Manager and Re-Founder of Computerland.ca, President and Co-Founder of webHancer Corp, and part of the establishing team at CrossKeys Systems Corporation.

MARC WAYNE, PRESIDENT, BEDROCAN CANADA, INC.

As co-founder and CEO of Bedrocan Canada, Marc led the company’s emergence as one of the leaders in the Canadian medical cannabis sector, in terms of production expertise and capacity, registered patients, product quality and customer care. Among the first licensed producers to be publicly-traded, Bedrocan built a strong reputation for professionalism, and scientific and research excellence. Together with its Dutch licensor, Bedrocan is the most experienced medical cannabis producer in the world, and is the only company in the world currently capable of producing standardized full-bud, pharmaceutical-grade medical cannabis.

Marc is formerly the Director of Business Development for the Canadian Consortium for the Investigation of Cannabinoids (CCIC), a leading organization of scientists and healthcare professionals established to promote evidence-based research and medical education concerning the therapeutic application of cannabis and cannabinoid-based medicines.

Marc is Board Chair of the Canadian Medical Cannabis Industry Association (CMCIA), Canada’s leading member-driven association for licensed producers of medical cannabis.

Mark Zekulin, President, Tweed Inc.

Mark’s focus at Tweed is ensuring that patients and healthcare practitioners choose Tweed as their trusted supplier of marijuana for medical purposes. This includes overseeing Tweed’s medical and patient outreach strategy, driving Tweed’s operations and advancing Tweed’s market strategy. He is also Tweed’s Senior and Responsible Person in Charge under Health Canada’s Marihuana for Medical Purposes Regulations.

A graduate from the University of Waterloo in Mathematics, the University of Ottawa in Law, and the University of Cambridge in International Law, Mark has previously focused his career on providing legal, political and strategic advice to high-profile local and international corporate clients, most recently as Counsel at the Ottawa-Washington international trade law firm of Cassidy Levy Kent. Previously, Mark has also served as a Senior Advisor to the Honourable Dwight Duncan, the Ontario Minister of Finance, and has worked internationally at the Business and Industry Advisory Committee to the Organization for Economic Co-operation and Development (OECD) as Acting Senior Policy Manager.

ANGUS FOOTMAN, PRESIDENT, TWEED FARMS INC.

Angus guides a team of horticultural professionals as they produce highly effective medical cannabis in a sustainable natural greenhouse environment. A graduate of the University of Guelph, one of North Americas leading agricultural institutions, he has held leadership roles as the chairman and president of a diverse range of public and private companies in the technology, engineering and agricultural sectors. Throughout his career he has lived and worked in the United Kingdom, Asia, Colorado and California. In his “spare” time Angus embraces his passion for agriculture with his family on their equestrian farms in Georgetown, Ontario and Ocala, Florida.

Tim Saunders, CFO, TWEED MARIJUANA INC.

Tim Saunders is a finance executive experienced with large international public companies and private equity-backed start-ups, having worked both in Canada and Europe. His leadership style focuses on business transformation and forward thinking to advance business capability and the business model. Tim joined Tweed in June 2015 after gaining executive and leadership experience across a number of sectors including mobile, telecom, semiconductors, manufacturing and clean tech. Tim most recently led Black Canvas Consulting with assignments such as Strategic Advisor to the President's Office of Export Development Canada. Tim was previously a senior finance executive with Vodafone, Oskar Mobil, Mitel and Zarlink Semiconductor and CFO at Plasco Energy Group where he was instrumental in raising $360 million in capital during the early start-up of the company until 2013.

Tim earned his CPA, CA with PricewaterhouseCoopers and is a proud graduate of Bishop’s University (Quebec) where he obtained his BBA. Tim also earned an executive certificate from the Ivey School of Business at the University of Western Ontario.

Posted to 420 Investor on Jun 24, 2015 — 1:06 PM
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