Ayr Strategies (CSE: AYR.A) has wasted no time expanding into the Arizona market following the decision last night by voters to make recreational cannabis legal within the state. The company this morning announced that it has agreed to acquire a vertically integrated operator for total upfront consideration of $81 million under a binding term sheet.
The asset, whom is unnamed, currently operates a 10,000 square foot cultivation and processing facility in Chandler, while also having an 80,000 square foot facility under construction in Phoenix. In terms of dispensaries, its slightly unclear in terms of what Ayr has acquired. Initially, the release indicates there are three licensed dispensaries, however it then goes on to say that that it is acquiring “three licensed dispensaries in greater Phoenix, two in Chandler and one in Glendale.”
Further, the asset is said to enable Ayr to “enter a thriving and robust market at 3.7x 2021 estimated Adjusted EBITDA, generating significant value for our shareholders.”
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The upfront purchase price of $81 million will be settled via $10 million in cash, as well as $41 million in stock, which is estimated to result in the issuance of 2.75 million shares of the issuer. Additionally, $30 million in sellers notes will also be payable. Earn-out payments of up to 2.0 million shares are also in play, dependent upon certain cultivation targets for 2021 and 2022 being met.
“Arizona has been a terrific medical market, third in the U.S. in terms of patient penetration at 3.4% and currently generating approximately $800 million in annual revenue. Yesterday, voters decided to make it a recreational use market as well. We are thrilled to be able to leverage our experience, talent, brands and success in Nevada and Massachusetts to bring quality and choice to the Arizona market.”
Jonathan Sandelman, Chairman and Chief Executive Officer of Ayr
Following the transaction, which is subject to final due diligence, the company will have operations across Arizona, Massachusetts, Nevada, Pennsylvania, and Ohio.
Ayr Strategies last traded at $19.55 on the CSE.
Information for this briefing was found via Sedar and Ayr Strategies. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
