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Schwazze Shares Bounce On Heels Of Five Star Buds Deal Valued At $72.3M

March 3, 2021 12:05 pm
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Schwazze Shares Bounce On Heels Of Five Star Buds Deal Valued At $72.3M

Schwazze, previously known as Medicine Man Technologies Inc. (OTCQX:SHWZ), completed the acquisition of five Colorado-based Star Buds dispensaries in a $72.3 million stock and cash deal.

The news comes on the heels of its $34 million raise, via the latest tranche of preferred equity.

The Colorado company brought its total fundraising to $56 million, to help support the overall acquisition.

Star Buds is a retail cannabis operator with a diverse portfolio of cannabis products, such as strains, concentrates, edibles, and tinctures.

Under the deal, the total consideration of $72.3 million comprised of $27.5 million in cash, $26.9 million in seller’s notes, and $17.9 million in preferred stock, with a price of $1,000 per share.

The newly acquired Star Bud dispensaries are located in Aurora, Louisville, Westminster, and Denver.

Back in June, Schwazze revealed its plan to buy all 13 Star Bud stores in Colorado. In December, it closed the purchase of six retail locations and in February, it acquired two more.  

Why It Matters

With the newest transaction, Schwazze officially completed the acquisition of all 13 Colorado-based Star Buds dispensaries. This brings the total number of its dispensaries in the Denver metro and southern Colorado region to 17.

In 2020, these 13 Star Buds retail stores reported combined revenue of around $70 million, which brings a total combined 2020 pro-forma revenue for Schwazze to around $95 million (as it includes Mesa Organics’ revenue, which the company bought in April).

What’s Next

“We are excited to have completed our acquisition of Star Buds Colorado, a highly respected, innovative and trusted retail operation characterized by high-quality products and its budtenders’ commitment to customers and cannabis expertise,” Schwazze CEO Justin Dye stated.

Dye explained the company now plans to incorporate these new locations, “utilizing our proven integration playbook that streamlines the M&A process and drives operational and financial synergies. We are looking forward to growing the Star Buds brand through internal and external methods.”

On Wednesday, Scwazze’s shares opened at $2.49 each and jumped 19.68% trading at $2.98 per share by 11:20 p.m. EST. 

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Cannabis M&A News Markets