(This developing story was updated at 1:08 p.m. ET.)
Major multistate marijuana operators Cresco Labs and Columbia Care on Wednesday said they have agreed to combine in a blockbuster deal worth roughly $2 billion, with Chicago-based Cresco set to acquire New York-headquartered Columbia.
The proposed all-stock merger is one of the largest in the cannabis industry to date and would produce one of the biggest MSOs in the nation.
The combined footprint of the two companies would include more than 130 cannabis retail locations across 17 states and the District of Columbia, reaching about 55% of the U.S. population, the companies said in a news release.
Those states include “today’s most influential markets and those with the biggest tailwinds for growth and adult-use upside,” the companies said, specifically citing New York, New Jersey, Virginia, Pennsylvania, Ohio, Maryland and Florida.
The companies said the combined business would have pro-forma annual revenue “in excess of $100 million in 8 different states by 2023” and total revenue of more than $1.4 billion before any divestitures, making Cresco the largest annual revenue generator in the cannabis industry.
The acquisition is poised to create “a clear industry leader,” Owen Bennett, a cannabis equity analyst for New York-based investment bank Jefferies Group, wrote in a Wednesday morning note to clients.
Cresco’s “main shortcomings were the fact a few important states were missing and its margin profile,” Bennett wrote, whereas Columbia Care has “an excellent geographic footprint, but lacked any scale overlaying this.”
“The combined company will have scale across most key states, industry-leading brands and wholesale across these states, and much improved margin profile.”
‘Main drivers of value’
Cresco and Columbia Care also said they would achieve synergies by boosting retail productivity, cutting “redundant operational and capital expenses” and “(deleveraging) the organization through the proceeds from the sale of redundant licenses and assets in high-value markets.”
On a Wednesday conference call, Cresco CEO Charlie Bachtell said those synergies would be “definitely one of the main drivers of value that you’ll see from this combination.”
...
Excerpt only …
READ MORE BELOW
March 23, 2022 - Updated March 23, 2022
Photo Credit:
Source : MJBizDaily
Link to original : Cresco Labs to buy rival marijuana MSO Columbia Care in $2 billion deal
