Citation Growth has executed a definitive agreement to acquire all of the equity interests of the ACC Group of Companies, a Nevada-based group of companies licensed for cannabis cultivation and well-known for its award-winning cannabis cultivars. "Following the completion of the transaction contemplated in the Definitive Agreement, we believe the integration of ACC will reaffirm our continuing corporate growth strategy: to become a leading multi-state operator (MSO) of cannabis cultivation and production assets across the United States and Canada, as legislation and regulations may permit," the team with the company explains.
Rahim Mohamed, Chief Executive Officer of Citation, reiterated his earlier comments, stating, “Citation believes the accretive benefits derived from the acquisition of ACC, which includes the group’s advanced cannabis cultivars program, will provide Citation with an experienced and operationally diverse cannabis industry partner with which to progress our triple-organic-certified cultivation program – to set new industry standards for quality, cost, and margin in every jurisdiction in which we operate.” Mr. Mohamed continued, “Citation anticipates the quality, capacity, and reputation afforded by the acquisition of ACC will transform our Nevada program and position the company to become one of the pre-eminent cannabis cultivators and producer in the state.”
"Following the closing of the Proposed Transaction, Citation believes that it will have completed a key strategic alignment in the State of Nevada, providing the launchpad to become one of the dominant cultivators and distributors of premium cannabis products to the State’s vibrant medical and recreational markets." The Company further anticipates that the integration of ACC’s innovative agronomic ability and cannabis marketing infrastructure will help bolster Citation’s triple-organic-certified cannabis cultivation and production experience.
According to the company, following the Closing of the Proposed Transaction, Citation anticipates that the acquisition of ACC will:
- create one of the largest license holders for cultivation in the State of Nevada, with an estimated, consolidated licensed footprint for the combined entity of up to 569,600 ft2, including up to 16,000 ft2 in processing space for cannabis concentrates and edibles, assuming the successful completion of all proposed site phases, with an estimated capital expenditure requirement for the combined entity of approximately US$90MM , which the Company anticipates will be made available through a combination of equity and non-dilutive debt financings, as well as from the reinvestment of profits generated from the Company’s operations;
- significantly enhance Citation’s Nevada operations by combining the Company’s comprehensive experience in organic cultivation techniques with ACC’s award-winning seed genetics program, fostering a new, premium cannabis powerhouse in the State of Nevada, and any such other jurisdictions it may enter, as regulations and legislation may permit;
- provide the opportunity to build upon ACC’s successful CY2018 management estimated unaudited financial performance, where it achieved revenue of approximately US$7.9MM, gross margin of approximately 57%, and adjusted EBITDA of approximately US$1.0MM;
- provide Citation with an approximate ACC management-estimated, annualized US$114MM in additional forward-looking revenue, at an ACC management-estimated, annualized EBITDA margin of approximately 25%, assuming the completion of all proposed phases and maximum operational efficiencies being realized, with an estimated capital expenditure requirement of approximately US$50MM; and
- enhance the Company’s suite of portfolio products with the addition of three (3) new, established brands within the State of Nevada, including BluntBox, Garden of Weeden, and Superior, to complement Citation’s established FIOREcannabis flower brand.
Howard Misle, who will be joining Citation as the Company’s Chief Executive Officer upon the Closing of the Proposed Transaction, restated his earlier comments, “ACC has been pleased to observe the significant traction and rapid growth achieved by the Citation team since its entrance into the Nevada cannabis market, while also noting Citation’s reputation is quickly becoming synonymous with success, innovation, and high- quality production.” Mr. Misle added, “In electing to partner with Citation and its experienced management team, ACC believes it will gain the expanded platform and capital markets support network necessary to leverage our collective success, allowing for an eye toward future growth outside of the State of Nevada.” Following the appointment of Howard Misle as Chief Executive Officer, Rahim Mohamed will serve as President of the Company.
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