Florida-based Trulieve Cannabis Corp. announced on Monday that it has reached an agreement to acquire Harvest Health and Recreation Inc. of Arizona in an all-stock deal valued at approximately $2.1 billion. The transaction creates a company with a combined footprint in 11 states in what Trulieve CEO Kim Rivers characterized as the “the largest and most exciting acquisition so far in our industry, creating the most profitable public multistate operator.”
“This combination offers us the opportunity to leverage our respective strong foundations and propel us forward with an unparalleled platform for future growth,” Rivers said in a statement from Trulieve. “Harvest provides us with an immediate and significant presence in new and established markets and accelerates our entry into the adult-use space in Arizona. Trulieve and Harvest are leaders in our markets, recognized for our innovation, brands, and operational expertise with true depth and scale in our businesses.”
Under the terms of the deal, shareholders of Harvest will receive 0.1170 of a subordinate voting share of Trulieve for each Harvest subordinate voting share owned. The rate of exchange for Harvest’s shares indicates a price of $4.79 per share, which equates to a premium of 34% over Friday’s close for stock in the company.
Deal Boosts Trulieve’s Growth
Trulieve is a cannabis multistate operator (MSO) with operations in the northeast and the southeast United States, while Harvest’s business is focused in the southwest, west coast, and northeast. The combined company will have licensed cannabis operations in 11 states, including 22 cultivation and processing facilities with a total capacity of 3.1 million square feet, as well as 126 dispensaries retailing cannabis for medicinal and recreational use. Harvest is also a shareholder in Hightimes Holdings Corp., the parent company of High Times.
Steve White, the CEO of Harvest, said that his company was thrilled to be joining Trulieve, which he noted “has achieved unrivaled success and scale in its home state of Florida.”
“As one of the oldest multi-state operators,’ said White, “we believe our track record of identifying and developing attractive market opportunities combined with our recent successful launch of adult-use sales in Arizona will add tremendous value to the combined organization as it continues to expand and grow in the coming years.”
The deal has been unanimously approved by the boards of directors of both Trulieve and Harvest. Additionally, Harvest shareholders representing more than 50% of the voting power of Harvest’s issued and outstanding shares have entered into an agreement with Trulieve to support the transaction.
The deal supports Trulieve’s expansion in core markets including Florida, Maryland, and Pennsylvania, and establishes a southwest hub to service key markets including Arizona, where voters legalized the recreational use of cannabis for adults in last November’s general election. The combined company will hold a leading market share in both Arizona and Florida.
Morgan Paxhia, co-founder and managing partner of Poseidon, one of the longest-running investment funds in the cannabis sector, told High Times in an email that Trulieve acquiring Harvest continues an ongoing trend of mergers and acquisitions (M&A) in the cannabis industry.
“This combination creates a multi-state operator that is expected to generate over $1 billion in 2021 revenue. It is clear that the near-term growth and total addressable market are predominantly in the USA but we need SAFE banking to support our industry and enterprises of this scale,” Paxhia said. “Cannabis is growing up and M&A deals of this size are another key data point in its growth trajectory. The Trulieve acquisition of Harvest creates a new tier of multi-state operator with expected revenue of more than $1 billion in 2021.”