Cansortium, a Florida-based vertically integrated cannabis multistate operator, is merging with RIV Capital, which operates the Etain Health marijuana brand in New York.
Under terms of the deal, Cansortium – which operates under the Fluent brand – will acquire all the issued and outstanding Class A common shares of RIV Capital in exchange for Cansortium shares, according to a news release.
Shareholders of Toronto-based RIV will receive 1.245 of a common share of Cansortium for each RIV share.
Upon closing, Cansortium shareholders will hold roughly 51.25% of the combined business.
RIV shareholders and The Hawthorne Collective – a ScottsMiracle-Gro subsidiary that invested in RIV in 2021 – will hold approximately 48.75% of the combined company.
Shareholders still must approve the proposed merger.
More details
According to the release, the deal will:
- Establish a combined company consisting of eight cultivation and processing facilities and 42 stores operating in four populous but limited-license markets – Florida, New York, Pennsylvania and Texas.
- Create a pro forma cash balance of roughly $74 million to fund accretive growth.
- Be transformative for The Hawthorne Collective by relieving the company of $175 million of debt.
- Establish cost efficiencies in cultivation, processing and administrative costs estimated at $5 million-$10 million.
- Create a more powerful team at both the management and operating personnel levels.
The combined company will operate under the Cansortium name, and Cansortium shares will continue to trade as CNTMF on the over-the-counter markets and as TIUM.U on the Canadian Securities Exchange.
It will be headquartered in Tampa, Florida, where Cansortium is currently headquartered.
Cansortium CEO Robert Beasley will stay on as CEO of the combined company.
“As a Combined Company, we will continue to focus on growth and profitability while relying on our core principles in cultivation, operating efficiencies and inventory optimization to deliver strong cash flows for shareholders,” Beasley said in a statement.
Cansortium’s revenue increased by 11% in 2023 to $97.3 million, compared with $87.7 million in 2022, according to the company’s full-year financial results.
Deal follows Hawthorne strategy
Executives of Ohio-based Hawthorne told MJBizDaily last November that the company was seeking M&A opportunities.
The head of ScottsMiracle-Gro applauded the deal, saying the company plans to exchange its existing convertible notes in RIV for a new class of nonvoting exchangeable shares of Consortium at closing.
“The combination of these two companies is a transformative step in the strategy we initiated in 2021 when we first invested in RIV Capital,” Jim Hagedorn, chair, CEO and president of ScottsMiracle-Gro, said in a statement.
RIV acquired Etain Health for $247 million in 2022.
“Together, (the combined company) will have the financial means and strong operating team to expand in four of the five most populous states, leading to value-creation opportunities for RIV and Cansortium shareholders as well as our ScottsMiracle-Gro investment,” Hagedorn said.
Canadian cannabis operator Canopy Growth spun off RIV, formerly called Canopy Rivers, in 2020.
Kate Robertson can be reached at kate.robertson@mjbizdaily.com.
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