Curaleaf agrees to acquire Grassroots for $875 million
Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF), one of the nation’s leading vertically integrated cannabis operators, announced Wednesday, an agreement to acquire GR Companies, Inc. (“Grassroots”), the largest privately held vertically-integrated multi-state operator, for $875 million.
This deal which includes cash and stock options solidifies Curaleaf’s position as the world’s largest cannabis company by revenue.
The acquisition brings largest publicly owned and largest privately held multi-state operators in the U.S.
Grassroots has been identified as a market leader in the Midwest, with a portfolio consisting of 61 dispensary licenses, with 20 operating today, and 17 cultivation and processing licenses that will substantially accelerate Curaleaf’s continued expansion nationwide.
Curaleaf has shown interest in moving into the Missouri medical marijuana market and was previously publicly named by another news organization as having prefiled application fees with the state of Missouri for licenses.
Grassroots has an existing presence in several markets Curaleaf does not currently operate in, including Illinois, the 11th state to legalize adult-use cannabis which becomes effective in January 2020.
The transaction broadens Curaleaf’s presence from 12 to 19 states, and the combined company will have 131 dispensary licenses, 68 operational locations, 20 cultivation sites and 26 processing facilities.
“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.”
Mitch Kahn, co-founder and CEO of Grassroots, said, “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.”
This transaction builds on the numerous strategic transactions announced to date in 2019 which expanded Curaleaf’s footprint in Arizona, California, Nevada and Ohio, continuing to differentiate the company as the most accessible cannabis brand across the U.S. The combined entity’s geographic reach, purchasing power, economies of scale and joint best practices solidifies its top position amongst U.S. multi-state operators.
Transaction Terms and Approvals
Curaleaf will acquire Grassroots for total consideration of approximately $875 million, composed of $75 million in cash, 102.8 million subordinate voting shares of Curaleaf, and $40 million in Curaleaf shares priced at the 10-day volume-weighted average price prior to closing of the transaction. At closing, securityholders in Grassroots will have approximately 16% pro forma ownership of Curaleaf on a fully-diluted basis after giving effect for the Select acquisition.
The proposed transaction is expected to close in early 2020, subject to customary closing conditions, Grassroots’ stockholders’ approval and regulatory approvals. The transaction has been unanimously approved by the Boards of Directors at both companies.