New York-based Acreage Holdings is acquiring cannabis edibles and beverage company Form Factory in an all-stock transaction valued at US$160m.
Acreage will issue approximately 6.4 million subordinate voting shares to Form Factory shareholders at a deemed price of US$25 per share.
The transaction marries up Portland, Oregon-based Form Factory’s expertise as a one-stop-shop for developing, manufacturing, and distributing cannabis products to Acreage’s 19-state footprint of growing, manufacturing and distributing cannabis-based consumer and medical products.
Acreage said the deal “sets the stage for [us] to become the first national cannabis Consumer Packaged Goods (CPG) company, capable of creating and distributing predictable and scalable proprietary brands, nationally, delivering those capabilities on a contract basis to other cannabis brands, and offering a turnkey cannabis industry solution to traditional non-cannabis CPG companies like Nestle, Mars or Procter & Gamble”.
“Creating a wide range of products that meet the diversified tastes of consumers and owning the national manufacturing and distribution platform to ensure their consistent and predictable delivery on a national basis is a key to long-term success and value creation in the cannabis industry,” said Kevin Murphy, Founder, Chairman, and Chief Executive Officer of Acreage Holdings.
He continued, “With this acquisition, we are now positioned to be both the first and only national cannabis CPG company and distribution platform in the U.S. cannabis industry. The combination of the largest U.S. operational footprint, combined with the unique food and beverage manufacturing capabilities of Form Factory sets us on a direct path to become the Procter & Gamble of cannabis.”
“The combination of the largest U.S. operational footprint, combined with the unique food and beverage manufacturing capabilities of Form Factory sets us on a direct path to become the Procter & Gamble of cannabis.”
Kevin Murphy, Acreage Holdings (pictured)
The transaction is expected to be revenue accretive in 2019, and EBITDA accretive in 2020, and is expected to close in the first quarter of 2019.
“We are thrilled to be joining the Acreage family,” said Tony Bash, co-founder & Co-CEO of Form Factory, Inc. “The merger with Acreage represents the fulfillment of the vision we had when we founded Form Factory. With Acreage, our mission to create the largest supplier of trusted cannabis products in the world will accelerate, providing all people with access to the benefits of cannabis.”
Josh Held, co-founder and President of Form Factory continued “Form Factory’s innovative and proprietary delivery systems, combined with Acreage’s massive scale will ensure that we become a trusted partner enabling national brands to thrive.”
Todd Boren, Co Founder and Co-CEO of Form Factory and Managing Partner of MacArthur Investments, the largest shareholder of Form Factory, added “We embarked on this journey because we believed in the team at Form Factory and knew they were among the best in the world. Our merger with Acreage reflects the same confidence in their team and ensures we can continue to relentlessly innovate the science driving the cannabis industry to provide brands and consumers with safe, efficient and consistent product formulations.”
Specifically, through Form Factory, Acreage will acquire the following tangible assets:
- Grow/processing licenses and operations in Portland, Oregon, and Los Angeles and Oakland, California.
- Management services contract for the Washington contract manufacturing business.
- All intellectual property
Headquartered in Portland, Oregon, Form Factory is a cannabis manufacturer, co-packer, and distributor with operations in Oregon and Washington, and plans to expand in California.Cannabis Business Worldwide