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Columbia Care to acquire the Green Solution
Posted on Wednesday, 06 November 2019 12:06
Columbia Care is looking to become the leading operator of cannabis in Colorado through a USD 140.00 million acquisition of the Green Solution, which is the largest vertically-integrated marijuana manufacturer in the state.
The addition of the company creates a combined business with pro forma trailing twelve-month revenue of USD 138.00 million, a footprint of 74 dispensaries and 19 manufacturing facilities.
Under the terms of the agreement, Columbia care is offering USD 110.00 million-worth of its stock, USD 15.00 million in secured debt and USD 15.00 million seller’s note, with the potential for an additional milestone payment in 2021 – the amount of which was not disclosed.
The deal remains subject to customary representations, warranties and covenants for transactions of this type, as well as the green light from regulators to complete in the first half of 2020.
After closing, the stock-based consideration will be subject to a staggered lockup period over 12 months.
Founded in 2010, the Green Solution currently operates 21 revenue-generating dispensaries with two additional stores under development, due to open before the end of 2019.
The group is billed as having one of the country’s largest capacity, single site, automated manufacturing facilities that currently produces over 225,000 units of highly curated, branded products every month.
Its sites are expected to yield more than 48,000 pounds of the lowest cost, highest quality, indoor, outdoor and greenhouse flower in 2019 and nearly 150,000 pounds by 2023.
The Green Solution completed over 1.40 million retail transactions in 2018 and generated revenue of USD 73.00 million in the year to 30th September 2019.
Nicholas Vita, chief executive of the acquiror, said: “This transaction further advances Columbia Care’s promise to maximise shareholder return by making us even stronger, both financially and operationally, as we expect to see the majority of our existing markets transition to less regulated, legalised operating environments.
“At a price of 1.6x 2020E [expected] revenue, acquiring TGS [the Green Solution] nearly doubles our LTM [last 12 months] revenue, store count, and production capacity, and accelerates our path to profitability while expanding our portfolio to include more health, wellness and adult-use brands.”
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