New cannabis player Vinergy Resources (VIN.C) has announced a surprise deal to acquire a potential 51% stake in an established a European growhouse, nursery, and tissue culture player with decades of history in the business.

The target company that already does $14 million annually in audited revenue selling plants across Europe and beyond, is looking to expand into marijuana cultivation to fill a fast growing demand in nations such as Germany and Switzerland.

The company has shipped 35 million indoor, outdoor and edible plants globally from its lab and nursery headquarters.

Vinergy is a recent entrant into the Canadian public company cannabis space, with some of the technology coming from a family-owned, hard science background lab, while this latest acquisition is an established, mass agriculture business that currently sends indoor and outdoor plants to customers around the world, with a thriving tissue culture business already in operation within the potato trade.

The deal is a concerted push into the international space for Vinergy, where it sees long term growth potential in both the agricultural space in general, and more specifically across the cannabis sector.

Stock in VIN.C jumped 21% on the news, from $0.89 to $1.03.

The company share price has been on a tear of late, running from $0.10 on December 6 to $0.50 a month later, and now hitting ten-bagger territory.

The company they’re buying into has an FDA-certified laboratory with an R&D facility, rooting station, and weening facilities in in addition to a low cost, high efficiency lab. The target’s plan is to make a global push into the tissue culturing industry, where it sees much potential in a business currently served by third world players developing low grade products. To that end, it began operations in the potato industry, using tissue culturing to cut turnaround time for crops by as much as 2/3.

Currently, the company does 65% (€ 6.2 million annually) of its business in indoor plants, 20% in outdoors plants, and 15% in seed potatoes through its tissue culturing set-up.

Existing and potential customers include large retail players such as Home Depot, Wal-Mart, Costco, and similar sized European chains, as well as large scale agricultural operations.

The marijuana push within the company comes with an existing cannabis license, an export license, and strong interest from the growing EU market for cannabis and CBDs. Money from the sale to Vinergy will reportedly go towards building out that aspect of the business and accelerating the cannabis product development side.

For Vinergy, the deal looks easy to finance, given current market conditions, and opens a significant market to their products, licensing deals, and technology. At worst, they’re paying for a successful agricultural set-up that has market share, revenue, and is profitable. At best, they get to turn on the weed side of the business, while the tissue culturing operation shifts gears into the cannabis market, bringing a high ceiling of potential revenues going forward. The opportunity to move their own products into Europe through an existing supply chain is a big deal.

Vinergy recently announced it had commenced trading on the OTCQB.

— Chris Parry

FULL DISCLOSURE: Vinergy Resources is an Equity.Guru marketing client

Written By:

Chris Parry

A multi-Webster Award winner for excellence in BC journalism, Parry is the founder and publisher of Equity.Guru, which he built with the specific plan to blend old school reporting with stock promotion, in a way that puts the emphasis on truth, high standards, and ethics. Parry is a veteran of TV, radio, and print, and consults with public companies to help them figure out their storylines, lay down achievable milestones, and improve their communication with shareholders, while also posting regular deep dive analysis of companies in the public spotlight.

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