Vertically integrated cannabis company Curaleaf Holdings revised its deal to acquire privately owned multistate operator Grassroots Cannabis.
The stock and cash transaction was originally announced in July 2019 with a price tag of $875 million. But since then cannabis stock prices have fallen.
In a note issued Monday, Stifel GMP analysts Robert Fagan and Andrew Partheniou said the amended deal should be worth a total of approximately $700 million based on Curaleaf’s current share price.
- Eliminates the $75 million cash component of the original agreement.
- Increases the Curaleaf share consideration from $40 million to $90.1 million.
The share consideration for the deal will now total about 118.9 million Curaleaf subordinate voting shares.
Curaleaf said unspecified Grassroots assets in Illinois, Maryland and Ohio will also be sold off under the updated deal “to comply with local (limitations) on license ownership.”
Fagan and Partheniou wrote in their note that those divestitures could include store licenses in Illinois, stores and a facility in Maryland and a production facility in Ohio.
Proceeds from selling those assets could be worth between $100 million and $150 million, the analysts wrote.
The completed merger will “expand Curaleaf’s presence from 18 to 23 states, with the combined company having over 135 dispensary licenses, 88 operational dispensary locations, over 30 processing facilities and 22 cultivation sites,” according to the release.
Curaleaf trades on the Canadian Securities Exchange under the ticker symbol CURA.