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.
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