Billion Dollar Trulieve-Harvest Merger Closes, Combined Co. To Hit $1.2B In 2021 Revenue

Trulieve Cannabis Corp TRUL TCNNF and Harvest Health & Recreation Inc. HARV HRVSF have wrapped up their previously announced billion-dollar merger after months of negotiations.

The move comes on Trulieve's announcement that it has secured $350 million in financing through a private placement of 8% senior secured notes due 2026.

"This is a momentous day for Trulieve. Through this deal, we have officially established our position as the largest and most profitable multi-state operator in America with true depth and scale in key markets, positioning us to effectively execute on future state and federal catalysts," Kim Rivers, CEO of Trulieve told Benzinga. 

Deal Details

Under the deal between the two cannabis giants, Trulieve acquired all of the issued and outstanding subordinate voting shares, multiple voting shares, and super voting shares of Harvest.

The holders of Harvest shares obtained 0.1170 of a subordinate voting share of Trulieve for each subordinate voting share of Harvest held.

In total, the Tallahassee, Florida-based company issued an aggregate of roughly 50.9 million of its shares in connection with the transaction in exchange for all of the issued and outstanding Harvest shares.

What Does It Mean For Trulieve?

The combined company will operate a robust retail network of 149 dispensaries across 11 states and three strategic regional hubs, with market-leading positions in Arizona, Florida and Pennsylvania.

The deal combines Trulieve and Harvest's cash and cash equivalents of $289 million and $71 million, respectively, as of June 30, bolstered by Trulieve's recently announced financing and Harvest's $55 million proceeds from the sale of its Florida license to Planet 13 Holdings Inc.PLTH OTCQX: PLNHF).

It also adds the line of Harvest brands, including Alchemy and Roll One, across multiple form factors to Trulieve's portfolio of in-house brands and national brand partners.

In addition, with revenues of $215.1 million, net income of $40.9 million, and Adjusted EBITDA of $94.9 million that Trulieve reported in its second-quarter earnings report and Harvest's second-quarter revenues of $102.5 million, net loss before non-controlling interest of $19.2 million, and Adjusted EBITDA of $28.0 million. The acquisition creates the largest and most profitable cannabis operation in the U.S.

"This combination brings together two companies with depth and scale in key markets, providing a platform for growth for years to come," Steve White, CEO of Harvest, said Friday.

Rivers, who called the deal a "transformational milestone in our company's history," congratulated the employees of both companies.

"I extend my deepest gratitude to all Trulieve and Harvest employees for working around the clock to ensure the success of this transaction. On behalf of the entire Trulieve team, I look forward to serving an even greater share of the total addressable market and delivering best-in-class experiences for all our patients and consumers.”

Canaccord Genuity Corp. agreed to serve as an exclusive financial advisor and DLA Piper LLP and Fox Rothschild LLP acted as Canadian and United States legal counsel, respectively, to Trulieve. Canaccord Genuity Corp. also provided a fairness opinion to the board of directors of Trulieve.

Moelis & Company LLC agreed to serve as a financial advisor, and Bennett Jones LLP and Troutman Pepper Hamilton Sanders LLP acted as Canadian and United States legal counsel, respectively, to Harvest. Haywood Securities Inc. provided a fairness opinion to the special committee of the Harvest board of directors

What's Next?

The subordinate voting shares of Harvest will be delisted from the Canadian Securities Exchange after the market closes on Monday, October 4.

Trulieve agreed to focus on the northeast and southeast regions of the country, while Harvest will pursue opportunities on the west coast and northeast regions of the U.S.

The merged company is expected to generate revenue of $1.2 billion in 2021.

Price Action

Trulieve’s shares traded 0.11% higher at $26.91 per share after the market close on Thursday.

Photo: Courtesy of Ryoji Iwata on Unsplash

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Posted In: CannabisEarningsM&ANewsPenny StocksSmall CapMarketsKim RiversSteve White
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