SOL Global Investments Corp. has entered into a binding letter of intent with cannabis-focused private equity firm Merida Capital Partners dated April 23, 2019 to acquire Merida's Michigan subsidiary, MCP Wellness for an aggregate purchase price of US$150 million. MCP Wellness, a special-purpose vehicle (SPV) created to invest in Michigan cannabis operations, currently holds the rights to acquire two Michigan cultivation licenses, a processing license, and 3 fully licensed cannabis provisioning centers in Michigan with a fourth provisioning center scheduled to open in Ann Arbor in May.
"MCP Wellness also has plans to open an additional nine municipally-approved provisioning centers by August 2019. Assuming MCP Wellness' expansion plans are completed as scheduled, SOL Global and Merida expect Michigan gross revenue from the acquired business to generate in excess of US$61 million in calendar year 2019 and more than US$121 million in 2020.
"Following the closing of the Acquisition, SOL Global intends to combine the acquired Michigan business into CannCure to form a new multi-state operator ("MSO")," the company explains. "Under the terms of the LOI, the purchase price will be satisfied by way of US$35 million in cash and US$115 million in equity consideration in CannCure, resulting in Merida owning approximately 42% of CannCure (including after giving effect to the proposed CannCure private placement financing described below)." According to the company, in regard to the cash consideration, US$9 million will be sourced from cash on hand and US$24 million will come from a private placement financing of CannCure equity and/or debt on pricing and terms to be determined by management following market assessment.
"In addition to the acquisition, the retrofitting of an approximately 110,000 square-foot cultivation facility in Michigan will begin immediately to service the growing retail footprint and demand within Michigan with high-quality flower and cannabis strains from 3 Boys' respected growers," the company says.
"Over the past several years, Michigan has become one of the country's largest medical cannabis markets, projected at nearly US$900 million for 2019, according to New Frontier Data," said Mitch Baruchowitz, managing partner of Merida Capital Partners. "With adult use coming in 2020, Merida is excited by the opportunity to combine one of Michigan's leading retail operations with a Florida operator while aggressively pursuing additional acquisition targets across several states that will help create a more diversified company."
According to the company, SOL Global and Merida Capital are also in active negotiations on acquisitions for the MSO in additional states. Specifically, SOL Global is finalizing negotiations to acquire an industry leading California cultivator and processor with superior genetics and a chain of prime retail dispensaries in California, and at the conclusion of that transaction, SOL Global intends to pursue a "going public transaction" of the MSO by way of an initial public offering, reverse takeover, plan of arrangement or other similar transaction that will result in the listing of the shares of the MSO on a recognized Canadian stock exchange.
For more information:
SOL Global Investments
2300 E. Las Olas Blvd, 5th Floor
Fort Lauderdale, FL, 33301
United States of America
Phone: (+1) 212 729-9208
info@solglobal.com
solglobal.com