Columbia Care Inc (NEO: CCHW) announced a significant acquisition after market hours today. The firm will be purchasing Colorado based The Green Solution, the largest operator in the state. The transaction is valued at US$140 million.
While the transaction is large in size, other operators across the country should take note on the purchase price. With an initial value of US$140 million, it puts the acquisition price at effectively 1.9x sales – The Green Solution generated $73 million in revenues within Colorado on a trailing twelve month basis. This makes it one of the least expensive transactions within the cannabis space, and provides some insight on where mature markets may place valuations for cultivators and retailers alike.
The acquisition of The Green Solution will see Columbia Care acquire 21 currently operational dispensaries across Colorado, in addition to two locations currently under development. Also included is over 266,000 square feet of cultivation space expected to produce approximately 21,750 kilograms of cannabis in 2019, as well as an automated manufacturing system that produces 2.7 million products per year.
At a price of 1.6x 2020E revenue, acquiring TGS nearly doubles our LTM revenue, store count, and production capacity, and accelerates our path to profitability while expanding our portfolio to include more health, wellness and adult-use brands.
Nicholas Vita, chief executive officer of Columbia Care
Total initial consideration for Columbia Care’s purchase of The Green Solution is pegged at US$140 million, taking the form of $110 million in Columbia Care stock, $15 million in secured debt, and a $15 million sellers note. An undisclosed milestone payment may occur in 2021 as well. The transaction is expected to close in the first half of 2020, subject to regulatory approval.
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Columbia Care closed today’s session at $4.17 on the NEO.
Information for this briefing was found via Sedar and Columbia Care Inc. 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.
