JSE-listed company buying its CEO’s business for R845 million

Chantal Marx from FNB Wealth & Investments warned South African investors that there is a good chance that Cilo Cybin will not “work out at all”.

Marx shared this view on Business Day TV’s Stock Watch following a Cilo Cybin trading statement on 24 June 2025.

Cilo Cybin anticipates reporting a basic loss per share of between 0.8 cents and 0.9 cents, which is significantly worse than the basic earnings per share of 0.51 cents reported last year.

It also reminded shareholders that it entered into a share purchase agreement with the shareholders of Cilo Cybin Pharmaceutical.

Cilo Cybin Pharmaceutical was founded by Gabriel Theron, who also serves as the chief executive of the JSE-listed Cilo Cybin.

This deal will see Cilo Cybin pay R845 million for 100% of the issued shares in Cilo Cybin Pharmaceutical (CCP). It will be settled through the issue of Cilo Cybin shares.

Theron owns 61.5% of the economic interests in CCP, which means he will benefit the most from this sale.

The company informed investors that it has incurred substantial one-off acquisition-related costs associated with this deal.

These include, but are not limited to, fees for independent fair and reasonable assessments, corporate advisory, legal advisory, accounting, and tax advisory services.

“These non-recurring costs have been the primary contributor to the marginal loss reported by Cilo Cybin for the period under review,” it said.

Chantal Marx from FNB Wealth & Investments said Theron has big ambitions to develop Cannabis as a product, focusing on South Africa and Australia.

“They have done some development and have a small product set. However, it has not translated into anything meaningful yet,” she said.

She said investors who want to put their money into a Cannabis company and believe in the sector in South Africa and Australia can consider the company.

However, she warned that any rewards would take a very long time and that there is a high probability that it would not work out at all.

Cilo Cybin details

Cilo Cybin Holdings (CCC) was founded by Theron and listed on the JSE on 25 June 2024 as a special purpose acquisition company (SPAC).

The SPAC was established in February 2022 with plans to list that year. However, it initially did not obtain the required investment backing.

Cilo Cybin Holdings only raised R20.5 million, significantly less than the required R50 million to list the SPAC.

Following an initial unsuccessful listing in 2022, it tried again in 2024 and succeeded after receiving the required funding.

In the case of Cilo Cybin Holdings, the SPAC was formed to invest in commercial enterprises operating in the biotech, biohacking, or pharmaceutical sectors.

In the pre-listing statement, Cilo Cybin Holdings said that it identified CCP as its first target acquisition company.

CCP is a medical cannabis company based in Midrand, with cannabis cultivation, manufacturing and packaging facilities.

What stands out is that CCP was founded by Gabriel Theron in 2018. That means the target acquisition company and the SPAC have the same founder.

Therefore, Theron started CCP in 2018, then created Cilo Cybin Holdings SPAC in 2022 and listed it on the JSE to acquire his own company, CCP, using the funds raised from investors.

It raises concerns about a conflict of interest, with Theron at the centre of both companies. The concerns are two-fold.

• The Cilo Cybin SPAC (CCC) gives little financial information on the target company, Cilo Cybin Pharmaceuticals (CCP).

• Given that Gabriel Theron is also the founder of CCP, why was it necessary to create a SPAC instead of listing CCP directly?

Without audited financial figures for Cilo Cybin Pharmaceuticals, investors may not know whether buying the company is a good idea.

It is also difficult to calculate Cilo Cybin Pharmaceuticals’ fair value to determine whether the Cilo Cybin SPAC is overpaying for this company.

Theron previously told Daily Investor that the situation should not worry investors and that he listed Cilo Cybin as a SPAC because of its simplicity.

“Our Malaysian partners advised us that it would be a much faster process for them to approve the investment utilising a SPAC,” he said.

This was partly because, at the time of negotiations in 2023, Cilo Cybin Pharmaceutical was not yet profitable.

He also stated that there should be no concerns about him controlling both the SPAC and Cilo Cybin Pharmaceutical, which could lead to an inflated valuation for CCP.

“We take a long-term approach, and we have no intention to exit or cash out,” Theron told Daily Investor.

He explained that he would not be able to vote on the acquisition transaction due to his interest in both entities.

“Any investors who are unhappy with the transaction who invested in the IPO have a redemption right,” he said. This means that should they not vote in favour of the transaction, they will be refunded.

“It is our intention to always benefit our investors and grow the company to be a giant in the sector globally,” he said.