JSE’s first dagga business buys a Lesotho supplier | Fin24
 
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JSE’s first dagga business buys a Lesotho supplier

Sep 13 2019 09:41

The JSE-listed Labat [JSE: LAB], headed by former rugby boss and player Brian van Rooyen, is bulking up its dagga division with another takeover.

On Friday, it announced plans to buy a 70% stake in Lesotho dagga grower and manufacturer Zarenka for almost R58 million.

Established only this month, its Labat Cannabis business has already made investments in Knuckle Genetics, which produces  cannabis seeds and genetic materials for medicinal treatments, as well as in the Pac-con pharmaceutical facility which manufactures liquids, tablets, capsules, creams and gels.

Now it will also own a dagga producer: Zarenka has an interest in six cannabis licences in Lesotho, which allows it to cultivate, manufacture and export cannabis products for medical and recreational use. Each licence allows for 3 hectares of dagga cultivation. Two years ago, Lesotho became the first African country to legalise the growth of cannabis.

Zarenka also has agreements with one of the largest European cannabis pharmacy retail outlets, which will buy its products.

Zarenka is currently building a cannabis facility in Lesotho, with production due to start in November this year.

In a statement on Friday, Labat said that its latest deal is part of its plans to establish a fully integrated cannabis business. “(It) will enable Labat to supply the international market with a lower to mid-tier product for pharmaceutical purposes whilst the higher THC and CBD content is for the upper medicinal and medical research market.”

It is also planning a dual listing on the Dubai Finacial Market (DFM), to get more capital to further grow Labat Cannabis.

The Zarenka deal will be settled in new Labat shares. Zarenka founders Luxolo Vava and Mohammed Osman, will retain a 30% interest.

Labat, which was listed on the JSE twenty years ago, and also holds various investments in logistics, energy and tech.

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