Flora makes strides to acquire Colombian supplement company, Cronomed
Flora Growth produces organic cannabis oils and CBD-infused food and beverage pharmaceutical-grade, medical and cosmetic-grade derivatives from the cannabis plant for a wide range of uses including dietary and nutritional supplements.
Centering on its expansion in the Colombian and wider Latin American markets, Flora Growth has progressed with plans to acquire a 100% equity interest in Grupo Farmaceutico Cronomed S.A.S. (Cronomed) by entering into a letter of intent.
Headquartered in Bogota, Colombia, the pharmaceutical company develops both dietary and nutritional supplements. Cronomed’s product portfolio comprises a total of 10 dietary supplement products including vitamins, essential minerals and weight-loss supplements; along with 16 nutritional supplement items including meal replacements, protein powders, collagen powders, sweeteners and hydrating drinks.
Colombia registration and industry approval
Cronomed’s complete product ranges are all registered and approved by the Colombian National Food and Drug Surveillance Institute (INVIMA), which is considered the Colombian equivalent of the Food and Drug Administration (FDA) in the United States.
Complete with its INVIMA approval, Cronomed is now expected to be able to export its range of dietary and nutritional supplement products to Latin America and throughout the world. Currently, the nutritional name sells its range of products in Colombia to a wide pharmaceutical distribution network.
2020 nutritional plans
In 2020, Cronomed’s strategic plans are based on expanding its distribution of dietary and nutritional supplements to sizable supermarket chains, online retailers and the Colombian government.
As part of the agreement, Flora will team up with Cronomed’s existing research and development team to analyze and assess how its product lines can include and develop Flora’s organic-CBD oil to increase product effectiveness.
Describing the acquisition of Cronomed as a “significant milestone for Flora”, Damian Lopez, CEO of Flora continued that Cronomed is “expected to be a significant revenue source for Flora, initially in Colombia and then internationally”.
Flora sees an “untapped opportunity” to delve into how CBD in medicinal, nutritional and nutraceutical products can enhance their efficacy. As a result, Flora now plans to use Cronomed’s existing product selection to look into the positive impact of the use of CBD in such products. Flora plans to start exploring the infusion of CBD and will now start working with the INVIMA to obtain regulatory approval.
“We believe that Cronomed can deliver tangible results in 2020 and as such, we have structured the transaction in such a way the majority of the purchase price payments are conditional on Cronomed significantly increasing its sales in 2020,” Lopez went on to say.
Details of the transaction
The duo is now in the final stages of closing the transaction, which sets out a number of financial conditions, namely payments, that Flora must meet to finalize the agreement.
On closing the transaction, an aggregate amount of $1,890,000 in cash must be paid to Cronomed. On such a date, which must occur before 31st December 2020, Cronomed must increase its revenue from 2019 by 20%, and Flora will pay an aggregate amount of $2,000,000 in cash. In addition, before 31st December 2020, Cronomed must also increase its revenue from 2019 by 40%, and Flora will pay an aggregate amount of $2,000,000 in cash.