Curaleaf Holdings (CSE: CURA) (OTCQX: CURLF) is about to make history by becoming the biggest cannabis company in the world. The company announced this morning a landmark deal to acquire the largest privately held vertically-integrated multi-state operator Grassroots. The proposed deal involves a mix of cash and stock and is valued at a whopping $875 million.
The acquisition will catapult Curaleaf into 19 U.S. States and will boost the company’s nationwide footprint to a total of 68 dispensaries. The new combined entity will boast a 2019 Pro-forma revenue of USD $256 million.
Curaleaf also has intentions to enter 1-2 additional states which include Colorado. The company is also eyeing the European market which is ripe for the picking.
“With the acquisition of Grassroots and the pending acquisition of Select, Curaleaf is the world’s largest cannabis company by both revenue and operating presence,” said Joseph Lusardi, CEO of Curaleaf. “With a combined 68 open dispensaries, this transaction significantly accelerates our expansion strategy and strengthens our reach across the medical and adult-use markets. In addition, it enhances the depth of our retail and wholesale platform across the country. By leveraging our scale, as well as our market leading capabilities and expertise, we will continue to deliver value for our shareholders.”
“Today’s announcement is a testament to the hard work of the many employees that helped make Grassroots the leading cannabis company in the Midwest. This acquisition will enable us to give our patients and retail partners greater access to products that adhere to the highest standards of quality and reliability, and our employees the opportunity to be part of a best-in-class operator,” stated Mitch Kahn, co-founder and CEO of Grassroots.
Terms of the Deal:
- Total consideration of $875 million.
- $75 million in cash.
- 102.8 million in Curaleaf subordinate voting shares.
- $40 million in Curaleaf shares priced at the 10-day volume-weighted average price before the closing of the deal.
- Once closed Grassroots will hold roughly 16% pro forma ownership in Curaleaf (fully diluted).
- The deal is expected to close in early 2020.
- The deal is subject to:
- Customary closing conditions.
- Grassroots shareholder approval.
- Exchange and regulatory approval.
- The Deal has already been unanimously approved by the board of both companies.
Grassroots Board and Management:
- Grassroots management team brings to the deal:
- Vast experience in the Midwest marketplace.
- Large boost in the combined company’s expertise in real estate, retail, licensing, capital markets, brand development, sales, marketing, legal, and logistics.
- Shareholders of Grassroots upon closing of the transaction will have the right to appoint one person to Curaleaf’s board.
- Grassroots has selected Co-Founder and CEO Mitch Kahn to fill that board seat.
- Mr. Kahn co-founded Grassroots in 2014 and brings with him over 20 years of executive experience.
- The other co-founders, Steve Weisman and Matt Darin will join Curaleaf in senior management roles.
- Mr. Weisman served as the Chief Strategy Officer of Grassroots and has wealth of corporate governance and entrepreneurial experience stemming from his time as an attorney at Chicago based firm Kirkland & Ellis.
- Mr. Darin served as the Chief Operating Officer of Grassroots and has over 15 years of executive experience in the cannabis and commercial real estate space.
Curaleaf held an investor conference call on Wednesday, July 17 to discuss the Grassroots deal. For those interested in viewing the webcast reply it is available here.
About Curaleaf Holdings:
Curaleaf Holdings (CSE: CURA) (OTCQX: CURLF) is the leading vertically integrated multi-state cannabis operator in the United States. It is a high-growth cannabis company with a national brand known for quality, trust and reliability. The company is positioned in highly populated, limited-license states, and currently operates in 12 states with 48 dispensaries, 13 cultivation sites and 12 processing sites. Curaleaf has the executive expertise and research and development capabilities to provide leading service, selection, and accessibility across the medical and adult-use markets, as well as in the CBD category through its Curaleaf Hemp brand and Bido brand for pets. On May 1, 2019, Curaleaf announced the acquisition of the Select brand from Cura Partners for $948 million.
Grassroots is a cannabis company dedicated to serving, advancing and respecting the cannabis movement. Through its unique, vertically integrated business model, Grassroots grows, processes and sells trusted cannabis products that enhance life’s moments for people from all backgrounds. Its retail brand, Herbology, offers a unique, wellness and education-focused dispensary experience.
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