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Harvest Health & Recreation Inc (CSE:HARV) (OTC:HRVSF) and Verano Holdings LLC are no longer planning to merge — for now.
The two companies announced Thursday the joint decision to terminate their original deal, which was first announced back in April 2019.
The obstacles imposed by the regulatory authorities, both state and local, added to the extreme conditions suffered by the capital market and an otherwise challenging environment for the sale of assets, contributed to the companies making this decision.
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Neither party shall pay a fee for the termination of this agreement.
"Given the persistent challenges in consummating this deal and current market conditions both companies felt it was prudent to move forward separately at this time," Harvest CEO Steve White said in a statement. "We have tremendous respect for the entire team and operations at Verano Holdings."
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White said Harvest remains focused on developing assets in its core markets, including Arizona, Florida, Maryland and Pennsylvania. Recent capital raising efforts provided Harvest with sufficient resources to continue investing and move toward profitability, he added.
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Benzinga followed up with a Harvest spokesperson who said "both sides hope to revisit the deal in the future."
According to George Archos, Verano Holdings CEO, regulatory hurdles hurt the deal's progress and the decision to cancel the transaction "was not taken lightly."
"While both organizations worked very hard to consummate this transaction, significant delays in closing started with the Hart-Scott-Rodino antitrust review process," Archos explained. "Those were followed by state and local regulatory complexities in multiple states."
The coronavirus (COVID-19) outbreak also stalled progress as government officials have drastically shifted priorities.
"Now with the COVID-19 pandemic often being dealt with in the very agencies that must approve the transaction, it has become clear that this combination would not be completed within the established timeframe," Archos said. "We look forward to continuing to grow our operations as one of the largest privately held multi-state operators in the U.S."
Harvest will provide a corporate update regarding its capital, mergers, and acquisitions, strategy and prospects during its fourth-quarter earnings call on Tuesday, April 7.
Benzinga's Anthony Noto contributed to this report.
Photo courtesy of Harvest Health & Recreation.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.