Arizona-based Harvest Health & Recreation wants to swap a problematic deal and avoid a potential lawsuit with another acquisition that will still give it access to California and mitigate the reduction to revenue and EBITDA guidance.
Harvest Health sued Falcon International to exit a deal originally announced in February 2019. That deal was repriced on June 7, 2019, but the complaint, filed in U.S. District Court in Arizona, indicates this action is more than negotiating price amid falling stock prices.
The Falcon acquisition dropped in value by 45%-55% because of a decrease in price for Harvest shares.
But the court filing provides more details about the troubled deal, including: “Falcon’s reckless business practices have also threatened to put Harvest at risk of being named as a defendant, along with Falcon, in a whistleblower lawsuit in California, if it were to proceed to closing the planned merger with Falcon.”