Consolidation among US based multi state operators has officially begun. Trulieve Cannabis (CSE: TRUL) this morning announced that it will be acquiring Harvest Health & Recreation (CSE: HARV), creating what has been defined as the “most profitable multi state operator in the world largest cannabis market.”
The transaction is being pitched from a profitability standpoint, with the combined entity reportedly projected to have 2020 adjusted EBITDA of $266 million, and 2021E combined adjusted EBITDA of $461 million. The transaction is also expected to result in the largest US cannabis operator on a “combined retail and cultivation footprint basis.”
The transaction has been pegged at a total value of $2.1 billion, with consideration to consist of Trulieve shares. For each share of Harvest held, investors are to receive 0.1170 of a subordinate voting share of Trulieve. Upon closing, the combined entity is expected to have operations in 11 states, including 22 cultivation and processing facilities and 126 dispensaries.
The transaction implies a price per share of US$4.79 for Harvest shareholders, a 34% premium to Friday’s closing price. Harvest is expected to own 26.7% of the resulting entity. A shareholders meeting is to be held in the third quarter to approve the transaction, with over 50% of the voting power of Harvest already having entered into voting support agreements for the transaction. A US$100 million termination fee has also been agreed to by both parties.
Trulieve Cannabis last traded at $49.70 on the CSE.
Information for this briefing was found via Sedar and Trulieve Cannabis Corp. 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.