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Harvest Health to acquire Verano
Posted on Tuesday, 12 March 2019 12:41
Harvest Health & Recreation has agreed to pick up Verano Holdings, a US-based privately-held licenced cannabis manufacturer, in an all-stock transaction worth USD 850.00 million.

According to Zephyr, the M&A database published by Bureau van Dijk, this is the largest deal in the marijuana market since Altria injected CAD 2.40 billion (USD 1.79 billion) into Cronos Group for a 45.0 per cent stake and four seats on the board back in December.

Verano is billed as one of the biggest US-based multi-state cannabis operators and by joining Harvest Health will create a leading business in the sector by licenses held and facilities permitted.

The acquiror is offering CAD 8.79 per item of stock held the target and is expecting to operate up to 200 locations in 16 states and territories across the country, which includes 123 retail dispensaries, following closing.

By the end of the year, Harvest Health is anticipating having over 70 dispensaries, 13 cultivation facilities and 13 manufacturing sites in operations, with continued growth through 2020.

Closing is slated for the first half of 2019, subject to regulatory and shareholder approvals.

Verano, which has about USD 3.20 million in debt that is expected to remain with the company following completion, designs the Zen Leaf branded dispensary environments and distributes cannabis concentrates, edibles, extracts, flower and topicals.

Co-founder of the target, Sam Dorf, noted: “Verano and Harvest independently have always focused on business fundamentals to drive year over year growth in both revenue and EBITDA [earnings before interest, taxes, depreciation and amortisation]. Together, we expect to accelerate that momentum and raise the bar even higher for the industry.”

The sector has seen a number of sizeable deals in recent years, with countries legalising the recreational use of the drug, including the vote in Canada last year.

As a result, Aurora Cannabis paid CAD 3.20 billion for MedReleaf, while Constellation Brands increased its stake in Canopy Growth for CAD 5.00 billion.

© Zephus Ltd