A Green Giant Emerges: LGP and Cannatrek Tie the Knot in a $112m Cannabis Merger

In a move set to reshape the Australian medicinal cannabis landscape - and shake up the European scene while they’re at it - Little Green Pharma (ASX: LGP) has announced a transformational merger with unlisted rival Cannatrek, creating a vertically integrated juggernaut with global aspirations.

Under the scheme implementation deed signed on 14 January 2026, LGP will acquire 100% of Cannatrek’s issued capital via a scheme of arrangement. Post-merger, Cannatrek shareholders will emerge with 60.5% of the combined entity, with the potential to scale up to 68.2% depending on post-completion adjustments. LGP shareholders will be diluted to 39.5%, potentially dropping to 31.8%.

The Marriage of Muscle and Maturity

Both parties bring substantial firepower to the table. Cannatrek, headquartered in Melbourne, is one of the country’s largest and most successful cannabis firms, boasting a full-service model spanning cultivation, GMP-certified manufacturing, digital health platforms, and the country’s top-selling medicinal cannabis flower.

Cannatrek cultivation facility in Victoria, Australia

Meanwhile, LGP’s European footprint is formidable. It owns the largest cannabis production facility in Europe - in Denmark - and sells into more than a dozen export markets. While it’s a leader in Australia, LGP has shown notable foresight in staking a claim in the EU well before the current continental green rush took off.

Little Green Pharma Danish production facility

If you simply mashed their FY25 numbers together, you’d get a group with $112 million in revenue, $13 million in adjusted EBITDA, and a war chest of $15 million in cash. Importantly, they’d be sitting on net assets north of $136 million - a solid base from which to build a global brand.

Driving Scale in a Crowded Market

The merger is less about love and more about logic. In a market where operational scale, brand recognition, and deep distribution pipelines are becoming prerequisites for survival, the deal ticks all the strategic boxes. LGP's MD Paul Long said the deal would ensure the combined group “emerges as one of the largest and most vertically integrated medicinal cannabis businesses globally and a leading player in the Australian and European markets”.

Cannatrek chair Brent Dennison struck a similarly bullish tone: “We expect that by joining forces, we can enhance the profitability profile of the Combined Group in Australia with an ongoing emphasis on strong cash generation”.

Indeed, the synergy bingo card is almost fully marked: LGP’s excess capacity in Denmark can backfill Cannatrek's export needs, while Cannatrek’s Australian GMP capabilities can alleviate pressure on LGP’s domestic ops. Cost efficiencies are expected through consolidated clinic operations, optimised expense management, and a bolstered product suite of eight brands.

Contingent Value Shares: The Deal Sweetener

To address potential unknowns, Cannatrek shareholders will also receive contingent value (CV) shares - 0.727502 for every Cannatrek share held. These will convert into LGP shares in two years based on a balancing act of post-merger liabilities. If Cannatrek’s liabilities outweigh LGP’s by more than $2 million, fewer CV shares convert; if the reverse is true, Cannatrek shareholders may see their stake increase to as much as 68.2%.

Importantly, these CV shares are non-tradeable and non-voting until conversion.

Leadership and Governance: A Diplomatic Split

Little Green Pharma CEO, Paul Long

The leadership transition appears smooth, with a blended team drawing on both camps. Brent Dennison will become Chair, Paul Long takes the reins as Group CEO, while Cannatrek’s current CEO Jason Rance will head Australian operations. CFO duties go to Cannatrek’s Paula Butler, and LGP’s Alistair Warren continues as Company Secretary and Legal Counsel.

The board will consist of five directors: three from Cannatrek and two from LGP. Both companies will operate independently until the scheme is implemented on or around 1 May 2026.

Shareholder Support and Key Dates

The scheme already has board-level support from both sides. Cannatrek’s directors - who collectively control 22% of shares - have pledged their votes in favour, and the LGP board (13.1% of shares) is also on board.

A shareholder vote is slated for 2 April 2026, with final court approval targeted for 21 April. If all goes to plan, LGP will implement the merger on 1 May 2026.

Verdict: Bold, Risky, but Timely

While the CV shares provide a degree of downside protection, the real litmus test will be in execution. Merging two cannabis companies is not for the faint-hearted - and the industry is littered with stories of synergies lost in translation.

Still, both LGP and Cannatrek have proven they can integrate acquisitions (Cannatrek with Heyday, and LGP with HHI), and the proposed merger gives them the heft to stay competitive in increasingly mature - and unforgiving - medicinal cannabis markets.

For now, shareholders on both sides may be justified in sparking one up - to celebrate, of course.