Curaleaf Holdings has signed an amended agreement for its acquisition of GR Companies, one of the largest private vertically-integrated multi-state operators in the United States.
Joseph Lusardi, CEO of Curaleaf, stated, "Today's announcement marks another significant step forward in finalizing our acquisition of Grassroots, providing Curaleaf an important entry to highly populous, vertically integrated markets in the Midwest. The pending integration of Grassroots will solidify Curaleaf's position as the world's largest cannabis company by revenue and the most well-diversified, vertically integrated cannabis company in the United States, the world's largest cannabis market. We are well positioned to continue to lead our growing industry, and we look forward to closing the transaction and serving new patients and customers in the Grassroots community."
On July 17, 2019, Curaleaf announced the signing of a definitive agreement to acquire Grassroots. Under the new mutually agreed and amended terms of the agreement, the principal component of the transaction consideration remains the same at approximately 102.8 million subordinate voting shares ("SVS") of Curaleaf. What had initially been a $75 million cash component of the consideration has been eliminated, while the component of additional Curaleaf SVS to be priced at the 10-day volume-weighted average price prior to closing of the transaction has been increased from $40 million to approximately $90.1 million, subject to final adjustment. Accordingly, the total SVS consideration for the transaction is expected to be approximately 118.9 million shares(1). Curaleaf and Grassroots mutually aligned on the updated terms in support of the further optimization of cash, providing maximum flexibility to support the future growth of the business following the close of the transaction. In addition, the parties have resolved that certain Grassroots assets in Illinois, Ohio and Maryland will be designated for sale after closing to comply with local limitation on license ownership. The transaction price remains subject to usual working capital and other adjustments. Curaleaf's acquisition of Grassroots is currently expected to close upon completion of certain pre-closing conditions within the coming weeks.
"The planned integration of Grassroots is expected to expand Curaleaf's presence from 18 to 23 states, with the combined company having over 135 dispensary licenses, 88 operational dispensary locations, over 30 processing facilities and 22 cultivation sites with 1.6 million square feet of current cultivation capacity."
At closing, security holders in Grassroots will have approximately 18% pro forma ownership of Curaleaf on a fully-diluted basis. The amended terms of the transaction were unanimously approved by the Boards of Directors at both companies. A copy of the amended transaction agreement with respect to the proposed transaction will be filed under Curaleaf's profile on SEDAR at www.sedar.com.
Upon closing of the transaction, the core security holders of Grassroots will have, as a group, the right to appoint one person to serve on the Curaleaf Board of Directors. Mitch Kahn, co-founder and CEO of Grassroots, will fill the allotted board seat. Kahn co-founded Grassroots in 2014 and brings with him more than 20 years of executive experience.