Little Green Pharma has agreed to purchase distribution company Health House Australia from Melodiol Global Health for A$1.25 million, a fraction of what the business was once valued at.
The Western Australian cultivator and producer signed a binding letter of intent to acquire the business after Melodiol went into voluntary administration earlier this month.
Health House had initially been listed for sale at CAD$9.9m (A$10.9m), before the asking price was reduced and offers of CAD$3m (A$3.3m) were sought.
LGP has been granted an exclusive due diligence window that runs until January 31.
The company said Health House is cash flow positive and brings in annual revenue of $7.5m.
LGP chief executive Paul Long said: “This proposed acquisition represents a key milestone in LGP’s strategy to enhance our position as a market leader in the Australian medicinal cannabis sector.
“By integrating Health House’s operations with our existing capabilities, we can unlock significant synergies and deliver even greater value to our patients and stakeholders.”
LGP also said the deal would provide “enhanced vertical integration capability while ensuring Health House can continue to operate as one of LGP’s key distribution partners”.
Health House, founded by pharmacist Paul Mavor in 2016, has had a turbulent few years. The company was courted by Zelira Therapeutics in 2022, before Melodiol — then known as Creso Pharma — acquired the business for $4.6m later that same year.
