Harvest Health to acquire Verano Holdings in US $850m deal

US-based Harvest Health & Recreation Inc has entered into a binding agreement to acquire Verano Holdings, LLC – one of the largest privately held multi-state, licensed operators of cannabis facilities – in an all-stock transaction.

The deal’s estimated purchase price stands at approximately USD $850m based on a share price of CND $8.79.

Verano Holdings distributes cannabis concentrates, edibles, extracts, flower and topicals under brands such as GoldLeaf, Menta, Sweet Sins, Encore Company and Avexia.

The combined company will be one of the largest multi-state operators in the United States, says Harvest Health, as measured by licenses held and facilities permitted.

Following completion of the transaction, the combined company is expected to be operating 30 dispensaries, eight cultivation facilities and seven manufacturing facilities, with expected further aggressive operational expansion.

“The combination with Verano fits perfectly with our vision of creating the world’s most valuable cannabis company.”

Jason Vedadi, Harvest (pictured)

By the end of 2019, Harvest expects to have over 70 dispensaries, 13 cultivation facilities and 13 manufacturing facilities in operation. The company expects continued growth in 2020.

Upon completion of the transaction and regulatory approval, Harvest will hold licenses that will allow it to operate up to 200 facilities in 16 states and territories across the country, including 123 retail dispensaries.

Harvest’s planned acquisition of Verano will include:

  • Licenses and operations in 11 states and territories, including seven cultivation licenses, 37 retail licenses and potential to reach 150+ million Americans;
  • Vertically integrated, cash-flow positive operations;
  • Executive team with retail, manufacturing, branding, logistics and operational experience and 300 employees. Hiring for approximately 300 new positions in 2019 with a focus on hiring minorities, women and veterans;
  • Ethanol extraction technology at pharmaceutical grade levels providing new market opportunities for cannabis biotech, food and beverage verticals;
  • Portfolio of premium proprietary brands with 150 + product SKUs sold in 150 + retail locations;
  • Total cultivation expansion capacity of 900,000 sq. ft in Illinois, Nevada & Maryland;
  • Ownership of an interest in nine Zen Leaf dispensaries with average annual revenues 2.5x higher than retail cannabis industry averages;

“The combination with Verano fits perfectly with our vision of creating the world’s most valuable cannabis company,” said Jason Vedadi, Executive Chairman of Harvest.

“We are confident that this is an opportunity to continue to leverage each of our company’s strengths and drive continued shareholder value, while at the same time achieving the scale we know will give us a leadership position in one of the largest cannabis markets in the world.”

“This is a natural match between like-minded entrepreneurs who have built our companies from the initial facilities into two of the largest MSOs [multi-state operators] in the U.S., with an unwavering focus on operational excellence, superior quality products and service, and delivering value to customers and shareholders,” said George Archos, Verano Co-founder and CEO.

“Our growth and unique positioning in key markets allowed us to evaluate some of the largest players in the space, but we only had one unanimous choice for a major transaction and that was Harvest.”

“This is a natural match between like-minded entrepreneurs who have built our companies from the initial facilities into two of the largest Multi-state operators in the U.S.”

George Archos, Verano

“Verano has been creating a brighter way for cannabis production, products and health and wellness by assembling a stellar team of experts drawn from the cannabis industry and the top echelons of Fortune 500 corporations,” noted Sam Dorf, Verano Co-founder and Chief Growth Officer.

“We are excited to join forces with Harvest to leverage each of our strengths to share the benefits of cannabis in innovative new ways with an ever increasing customer base. Verano and Harvest independently have always focused on business fundamentals to drive year over year growth in both revenue and EBITDA. Together, we expect to accelerate that momentum and raise the bar even higher for the industry.”

The newly combined company plans to continue hubs of operation in both Arizona and Illinois and merge key leadership talent.

“From day one, we have operated as a fundamentally sound business focused on consistent revenue and profit growth. We are excited to bring Verano’s premium brands and operations into Harvest,” said Steve White, CEO of Harvest.

“We have the unique opportunity to create truly national brands by deploying these products within the future combined footprint of states and dispensaries. Most importantly, we share the same mission as one new company to improve people’s lives through the goodness of cannabis.”

Pursuant to the binding agreement entered into between Harvest and Verano on March 10, 2019, the parties agreed to enter into a definitive agreement within the next 30 days.

Upon closing, Verano shareholders will receive, in the aggregate, a combination of Harvest subordinate voting shares and Harvest multiple voting shares as mutually agreed between the parties, acting reasonably, for a total estimated purchase price of USD $850,000,000 based on a CSE share price of CND $8.79.

It is anticipated that the acquisition will close in the first half of 2019.Cannabis Business Worldwide

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