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Curaleaf to acquire Grassroots in $875M deal

The combined companies' holdings, which include a medical marijuana dispensary in Oxford, will be the largest cannabis firm in the world

Cyrus Moulton
Cyrus.Moulton@telegram.com
Curaleaf, which has a medical marijuana dispensary at 425 Main St. in Oxford, is buying Illinois-based cannabis company Grassroots in an $875 million deal. [T&G Staff/Steve Lanava]

Curaleaf Holdings Inc., which operates a medical marijuana dispensary in Oxford, announced Wednesday it is acquiring cannabis company Grassroots in a $875 million deal that creates the world’s largest cannabis company.

“The highly complementary acquisition brings together the largest public and largest private multi-state operators in the U.S. to offer a full range of products to consumers in states across the country,” Curaleaf said in a press release. “This transaction solidifies Curaleaf’s position as the world’s largest cannabis company by revenue and the largest in the U.S. across key operating metrics.”

Curaleaf is based in Wakefield, and operates in 12 states with 48 dispensaries, 13 cultivation sites, and 12 processing sites, according to the press release.

GR Companies Inc., also known as Grassroots, based in Chicago, has 61 dispensary licenses with 20 dispensaries in operation, and 17 cultivation and processing licenses. It has facilities in states including Illinois, Nevada, Pennsylvania, Michigan, Maryland, Oklahoma, Ohio, Vermont, North Dakota, Arkansas, and Connecticut, according to the press release.

Curaleaf will acquire Grassroots for $75 million in cash, 102.8 million subordinate voting shares of Curaleaf, and $40 million in Curaleaf shares priced at the 10-day volume-weighted average prior to closing of the transaction. The deal will expand Curaleaf’s presence from 12 to 19 states, and the combined company will have 131 dispensary licenses, 68 operational locations, 20 cultivation sites, and 26 processing facilities, according to the press release.

“Upon completion of the proposed transaction, Curaleaf will be the largest medical and adult-use cannabis company with access to a total population of approximately 177 million people,” the press release stated.

The deal is expected to be completed in early 2020.

"With a combined 68 open dispensaries, this transaction significantly accelerates our expansion strategy and strengthens our reach across the medical and adult-use markets," Joseph Lusardi, CEO of Curaleaf, said in a statement. "In addition, it enhances the depth of our retail and wholesale platform across the country. By leveraging our scale, as well as our market leading capabilities and expertise, we will continue to deliver value for our shareholders."

Mitch Kahn, co-founder and CEO of Grassroots, said the deal was "a testament to the hard work of the many employees that helped make Grassroots the leading cannabis company in the Midwest."

"This acquisition will enable us to give our patients and retail partners greater access to products that adhere to the highest standards of quality and reliability, and our employees the opportunity to be part of a best-in-class operator," Mr. Kahn said in a statement.

Curaleaf stock jumped on news of the sale, closing the day up 17.58 percent at $7.65.

It is the second major expansion deal that Curaleaf has inked in recent months.

The company announced May 1 that it was acquiring the state-regulated cannabis business of Oregon-based Cura Partners Inc., a company that sells wholesale cannabis oil to retailers under the brand name Select Oils. The all-stock transaction was valued at $948.8 million - the largest deal ever between two U.S. pot companies, according to Yahoo Finance - and 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.

Select THC products are sold by more than 900 retailers and Select is the leading cannabis brand in California, Arizona, Oregon, and Nevada, according to a press release announcing the deal.

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