Little Green Pharma (ASX: LGP) and Cannatrek announce merger to create $112 million cannabis giant

Two of Australia's biggest medicinal cannabis companies are joining forces. Little Green Pharma (ASX: LGP) and Cannatrek have announced a merger that would create one of the largest medicinal cannabis businesses in the world, with combined revenue of $112 million.

Under the deal announced on 14 January, LGP will acquire 100% of Cannatrek's shares through a scheme of arrangement. Both company boards have unanimously recommended the merger to their shareholders.

The deal

Cannatrek shareholders will receive 1.84 LGP shares for every Cannatrek share they hold, plus contingent value shares that could increase their stake depending on how certain liabilities play out over the next two years.

When the deal closes, Cannatrek shareholders will own about 60.5% of the combined company, with existing LGP shareholders holding 39.5%. That split could shift to as much as 68.2% for Cannatrek shareholders if LGP faces higher-than-expected costs from tax, litigation or bad debts.

The merger requires approval from shareholders of both companies at meetings scheduled for 2 April. If all goes to plan, the deal should close by 1 May.

Combined firepower

Based on each company's latest financial year results, the merged business would have:

• Revenue of $112.3 million
• Adjusted EBITDA of $13 million
• Cash of $14.9 million
• Net assets of $136.7 million

The combined group will have eight cannabis brands and operations spanning cultivation, GMP manufacturing, distribution, clinics and digital health platforms.

Who's in charge

The merged company will draw leadership from both sides:

• Chair: Brent Dennison (currently Cannatrek's Chair)
• Group CEO: Paul Long (currently LGP's Managing Director)
• Australia CEO: Jason Rance (currently Cannatrek's CEO)
• Group CFO: Paula Bulter (currently Cannatrek's CFO)

The five-member board will include three Cannatrek nominees (including Dennison) and two LGP nominees (including Long).

Why merge now

The deal reflects a maturing Australian cannabis market where scale matters. Both companies say the merger will help them compete more effectively at home while accelerating growth overseas.

LGP's Managing Director Paul Long said Cannatrek was "one of the largest and most successful medicinal cannabis companies in Australia" with a strong product portfolio and robust balance sheet.

"As the current Australian and global cannabis markets drive towards consolidation and greater maturity, this transaction will ensure the Combined Group emerges as one of the largest and most vertically integrated medicinal cannabis business globally," Long said.

Cannatrek's Chair Brent Dennison praised LGP's "great foresight in investing into the European market" and said the merger would help unlock growth potential in LGP's European operations.

"I anticipate that with the platform this merged entity creates, we will be active in the ongoing consolidation of the global medicinal cannabis market," Dennison said.

European expansion

A big part of the strategy is Europe. LGP operates the largest medicinal cannabis production facility in Europe, based in Denmark, which currently has spare capacity. Australian cannabis companies have been betting heavily on the European market as it grows toward becoming one of the largest in the world.

Cannatrek's strong balance sheet will help fund the expansion of LGP's Danish facility and provide working capital for European growth. Cannatrek had previously announced its own plans to enter Germany, but this merger offers a faster path into Europe through LGP's existing infrastructure.

LGP has been selling products in Denmark and currently exports to more than 12 markets. The company is one of the top three suppliers in Australia, the largest supplier into France, and a major player in Germany and the UK.

The companies

Cannatrek is one of Australia's most recognisable medicinal cannabis brands. The Melbourne-based company employs about 80 staff and operates one of Australia's largest GMP-certified manufacturing facilities. It owns what is widely recognised as Australia's highest-selling medicinal cannabis flower.

The company runs two digital platforms: Greenship, a B2B platform connecting pharmacies to cannabis products, and MyEden, a patient-facing app for telehealth bookings, prescription management and pharmacy delivery. Cannatrek also acquired Heyday, one of Australia's most trusted medicinal cannabis brands.

Cannatrek struck a deal with Chemist Warehouse to supply medicinal cannabis products through Australia's largest pharmacy chain.

Little Green Pharma is a Perth-based company that has grown into one of Australia's leading medicinal cannabis exporters. The company operates three production facilities in Denmark and Australia, including what it says is the largest medicinal cannabis facility in Europe.

LGP has a track record of acquisitions. The company acquired Health House International, which gave it a distribution business and expanded its presence in Germany. Mining billionaire Gina Rinehart invested $15 million in LGP back in 2020.

Escrow arrangements

To prevent a flood of shares hitting the market after the merger, major shareholders on both sides have agreed to hold onto their stock. About 23% of the combined company's shares will be locked up for six months, with another 23% locked up for 12 months.

Industry consolidation continues

The merger is the latest sign of consolidation in Australia's medicinal cannabis sector. Cannim recently announced its own strategic merger to expand into adult-use cannabis markets, and the industry's two peak bodies are also merging to form the Medicinal Cannabis Council Australia.

As the market matures and competition intensifies, smaller players are finding it harder to compete against companies with manufacturing scale, established distribution networks and strong balance sheets. This deal suggests the biggest players are betting that getting bigger is the best path forward.

What happens next

Event	Date
First court hearing	3 March 2026
Scheme booklet sent to shareholders	4 March 2026
Shareholder meetings	2 April 2026
Second court hearing	21 April 2026
Expected completion	1 May 2026

Shareholders don't need to do anything right now. Cannatrek shareholders will receive a detailed scheme booklet in early March, including an independent expert's report on whether the deal is in their best interests. RSM Corporate Australia has been appointed as the independent expert.

LGP shareholders will also vote on the deal at a general meeting on 2 April, as the share issue exceeds LGP's normal placement capacity under ASX listing rules.