Trulieve Proclaims Largest US Hashish Deal; The acquisition of Harvest Well being & Recreation Inc. creates probably the most worthwhile multi-state operator within the largest hashish market on the planet – MJNews Community
The combined company will maintain industry-leading size in retail, cultivation and manufacturing
Footprint offers National Scale a deep regional focus in attractive markets
Expanded runway for growth with new Southwest Hub and expanded Northeast and Southeast hubs
Combined consensus 2021E sales of $ 1.2 billion
FLORIDA & ARIZONA: Trulieve Cannabis Corp. and Harvest Health & Recreation Inc. announce that they have entered into a definitive agreement whereby Trulieve will acquire all issued and outstanding subordinated voting shares, multi-voting shares and super-voting shares of Harvest. Under the terms of the Agreement, Harvest shareholders will receive 0.1170 of one subordinated voting interest in Trulieve for each subordinated voting interest (or equivalent) held in Harvest, for a total of approximately $ 2.1 billion based on the closing price of the Trulieve shares on May 7, 2021.
Trulieve, a leading multi-state operator focused on the northeast and southeastern regions of the United States, and Harvest, a leading multi-state operator focused on the west coast and northeastern regions of the United States, have built deep. vertically integrated operations in their key markets and become leading operators in the US, the world’s largest regulated cannabis market.
Upon completion of the transaction, as well as other previously announced acquisitions by Harvest and Trulieve, the combined company will operate in 11 states, including 22 cultivation and processing facilities with a total capacity of 3.1 million square feet and 126 pharmacies serving both medical and serve the adult recreational cannabis market.
Important transaction highlights and benefits
- Increases scalability in our hub markets by creating the largest US cannabis operator on a combined retail and cultivation basis;
- Creates Most Profitable US MSO – with combined adjusted EBITDA for 2020 of $ 266 million1.2 and combined consensus-adjusted EBITDA3 for 2021E of $ 461 million for an unprecedented platform for further growth;
- Delivers a superior existing retail and distribution model – from a robust retail network of 126 pharmacies in 11 states, the combined company will have leading market shares in Arizona and Florida;
- Strong and growing presence in multiple states – strengthens Trulieve’s expansion in the northeast and southeast hubs of the United States in Florida, Pennsylvania and Maryland, and establishes a southwest hub in core markets like Arizona, where recreational adult cannabis use was recently legalized ;
- Optimizes nationwide presence – through established retail and wholesale channels in all markets, as well as the ability to reach an estimated total addressable market of $ 19.3 billion in 2025E (Arcview market estimate);
- Adds Premium Brands – to Trulieve’s portfolio of private label and national brand partners with a successful line of products across multiple form factors;
- Leverage skilled operations teams and best practices – from Trulieve and Harvest – to improve operational excellence by combining unparalleled knowledge and success in winning government license application processes and the ability to bring operations to market quickly; and
- Accretive Transaction strengthens Trulieve’s leading financial metrics – by bolstering superior financial performance versus peers through industry-leading margins and highly forecasted profitable growth.
“Today’s announcement marks the largest and most exciting acquisition in our industry to date, creating the most profitable multi-state public operator. It is important that our companies share similar customer values and focus on penetrating deep into the core markets. This combination gives us the opportunity to leverage our respective strong foundations and advance ourselves with an unparalleled platform for future growth, ”said Kim Rivers, Trulieve’s Chief Executive Officer. “Harvest gives us an immediate and significant presence in new and established markets and accelerates our entry into adult use in Arizona. Trulieve and Harvest are leaders in our markets and are known for our innovation, brands and operational expertise with real depth and size in our businesses. We look forward to providing world-class service to patients and customers on a wider national scale as we create an iconic U.S. cannabis brand. “
“We are delighted to be part of Trulieve, a company that has achieved unmatched success and magnitude in its home state of Florida,” said Steve White, Harvest’s chief executive officer. “As one of the oldest multi-state operators, we believe our track record in identifying and developing attractive market opportunities coupled with our recent introduction of adult-use sales in Arizona will add tremendous value to the combined organization as it continues to expand and grow in the coming years. “
Terms of the transaction
The transaction is being carried out under a contractual arrangement under the Business Corporations Act (British Columbia). Under the terms of the Agreement, Trulieve will acquire all issued and outstanding Harvest Shares, with each Harvest Shareholder receiving 0.1170 of a Trulieve Share for each Harvest, representing a price per Harvest of $ 4.79, which is a 34% premium on the closing price of the Harvest Shares on May 7, 2021. Upon completion of the Transaction, Harvest shareholders will own approximately 26.7% of the pro forma issued and outstanding Trulieve shares (fully diluted). The exchange ratio may be adjusted in the event that Harvest enters into certain refinancing operations in the meantime, with the potential adjustment being proportional to the additional cost of this financing in relation to the transaction value. Further details of the transaction will be set out in the management information circular and proxy statement that will be sent to Harvest shareholders in connection with a special meeting of Harvest shareholders that is expected to take place in the third quarter to approve the transaction.
The transaction was approved unanimously by the boards of Trulieve and Harvest. Harvest shareholders, who hold more than 50% of the voting rights in the issued and outstanding Harvest shares, have entered into voting support agreements with Trulieve in order to vote in favor of the transaction.
The Agreement provides for certain customary provisions, including non-solicitation of alternative transactions, a right to be compliant with superior proposals, mutual termination fees of US $ 100 million in certain circumstances, and mutual reimbursement provisions in certain circumstances.
The transaction is subject to, among other things, the approval of required approvals from the British Columbia Supreme Court, approval of two-thirds of the votes cast by the Harvest shareholders at the special meeting, and receipt of necessary regulatory approvals, including, but not limited to, approval under the Hart -Scott-Rodino Antitrust Improvements Act and other customary terms for completion. The approval of Trulieve shareholders is not required. Further details of the transaction will be provided in the circular.
Harvest’s board of directors, having received financial and legal advice, and after receiving and reviewing a unanimous recommendation from a special committee of independent directors, has unanimously determined that the transaction is in the best interests of Harvest and that it is on the basis of the fairness opinion (such as defined here) the consideration that the harvest shareholders have to receive is fair for the harvest shareholders from a financial point of view.
The Harvest Board unanimously recommends that Harvest shareholders vote in favor of the resolution approving the transaction. The Special Committee received a fairness opinion from Haywood Securities Inc. which provides that consideration be received as of the date of this opinion and based on and subject to the assumptions, processes, factors, limitations and qualifications set forth in the Harvest stockholders under the Transaction are fair to the harvest shareholders from a financial point of view.