Curaleaf Holdings has signed a definitive agreement to acquire the state-regulated cannabis business of Cura Partners, owner of the Select brand, in an all-stock transaction valued at C$1.27 billion or US$948.8 million.
The acquisition includes Select’s manufacturing, processing, distribution, marketing and retailing operations and all adult-use cannabis products marketed under the Select brand name, including all intellectual property.
Based in Portland, Oregon, Select is one of the USA’s best-known cannabis wholesale brands. With its THC products sold in more than 900 retailers, its products sell in California, Arizona, Oregon and Nevada.
The proposed transaction combines Curaleaf’s retail locations, vertical integration, wellness brand and strong East Coast market presence with Select’s wholesale model, lifestyle brand and leading West Coast market presence.
‘Significant cost synergies’ are expected to be realized through operational efficiencies, greater economies of scale, supply chain efficiencies and increased vertical integration.
“The transformational acquisition of Cura and the Select brand is another step in our journey to create the most accessible cannabis brands in the U.S.,” said Joseph Lusardi, CEO of Curaleaf. “The combination of Curaleaf and Select is a perfect fit. With our industry leading capacity, expansive retail distribution network and Select’s impressive sales and marketing capabilities, we intend to meaningfully accelerate our topline growth trajectory with the addition of the Select Oil product range.
“In addition, we intend to create significant operational synergies from the integration of Select’s wholesale business with our vertically-integrated cultivating, processing and retail platform. We look forward to welcoming the talented Select team who will bring superior brand marketing expertise and a culture of innovation in technology and product development.”
“The combination of Curaleaf and Select is a perfect fit. With our industry leading capacity, expansive retail distribution network and Select’s impressive sales and marketing capabilities, we intend to meaningfully accelerate our topline growth trajectory with the addition of the Select Oil product range.”
Joseph Lusardi, Curaleaf
“I could not be more excited about this transaction with Curaleaf and what it means for the Select brand and for our industry. The leading companies in the industry on the West Coast and the East Coast are now joining forces to progress the legalization and mainstream acceptance of cannabis across the country,” added Cameron Forni, CEO of Cura and founder of Select.
“Cura and the Select brand would not have the exceptional platform for growth that we have today without the incredible team that has built our foundation – from our production staff, to our sales and marketing teams, and our executive leadership. In partnership with Curaleaf, we will continue to uphold our standards across people, product and business innovation.”
At closing, Curaleaf will acquire all outstanding equity securities of Cura through the issuance of approximately 95.6 million subordinated voting shares (subject to certain adjustments), which based on Curaleaf’s closing price of C$13.30 on April 30, 2019, the last trading day prior to announcement of the transaction, represents a total purchase price of C$1.27 billion or US$948.8 million.
Post-transaction, Cura will have approximately 16% pro forma ownership of Curaleaf on a fully-diluted basis.
Additionally, Cura equity holders will be eligible to receive an earn-out of up to US$200 million from the issuance of additional subordinated voting shares, contingent upon Curaleaf exceeding certain 2020 revenue targets for its combined wholesale extracts business and Select-branded retail extract sales.
The transaction is expected to close in 2019, subject to customary closing conditions, regulatory approvals, Cura stockholder approval, and the receipt of an agreement from the holders of Cura’s convertible debentures with respect to the conversion of such debentures into equity. can be accessed through the Investor Relations section of Curaleaf’s website, https://ir.curaleaf.com/ir-calendar.
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until May 15, 2019 at 11:59 pm ET and can be accessed by dialing +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 10006779. The online archive of the webcast will be available on https://ir.curaleaf.com/ir-calendar for 30 days following the call.Cannabis Business Worldwide