Image of M&A in the sky

Chicago-based PharmaCann announced Tuesday it has struck a deal to acquire Colorado-headquartered LivWell Enlightened Health in a transaction that will allow PharmaCann to extend its market footprint to eight states.

Once the acquisition is completed, PharmaCann will gain new markets in Colorado and Michigan. The company will have 60 operational retail outlets and 11 cultivation/production facilities, according to a news release.

Advertisement

Terms of the deal were not disclosed. Both companies are privately held.

“As far as mega private acquisitions go, this one is gigantic,” Chicago-based marijuana industry consultant Michael Mayes told MJBizDaily.

He estimated the value of LivWell in the deal is likely in the “hundreds of millions” of dollars, probably between $100 million and $300 million.

“I felt PharmaCann was always a powerhouse, and this LivWell deal just reiterates that, and their strength,” Mayes told MJBizDaily.

Jeremy Unruh, PharmaCann’s vice president of public and regulatory affairs, said the sale price will remain private, but he added that LivWell will represent about 35%-40% of the combined company once the merger is completed.

“This is a union of two first-rate operators,” Unruh wrote in an email to MJBizDaily.

“It’s the first time in recent memory that we’ve stepped out of our existing footprint and into new markets.”

Apart from its home state of Illinois, PharmaCann has cannabis business interests in Maryland, Massachusetts, New York, Ohio and Pennsylvania.

LivWell operates in Colorado and Michigan.

PharmaCann CEO Brett Novey said in the release that the acquisition is likely the first of many expansion steps into new U.S. state markets for the company, and he called the merger “transformative.”

LivWell CEO John Lord will join the PharmaCann board of directors once the merger is completed.

Mayes noted that because both PharmaCann and LivWell are privately held, that gives the two companies more flexibility to negotiate deal terms.

He also believes PharmaCann is likely on track to go public at some point.

“It is only a matter of time before we see a PharmaCann IPO. I doubt they will be acquired since they have proven their access to capital is strong,” Mayes said.

“That’s when the lion’s share of their value is going to come into play.”

In August, Reuters reported that PharmaCann intended to go public in the fall with an initial stock offering that could be valued at more than $1 billion.

At the time, Unruh told MJBizDaily he declined to “comment on this anonymous report by Reuters.”

Contrary to acquisition deals that have broken up for various reasons – including California-based MedMen’s planned $682 million acquisition of PharmaCann in 2019 – this one isn’t subject to potential fluctuations of stock values, Mayes noted, which makes it more likely the deal will close.

“Barring anything that’s found out in the due-diligence phase … I think the likelihood of this thing going through is high,” Mayes said.

“Most companies won’t expose something like this unless they’re pretty far in the process.”

One acquisition that has gone through this year is Florida-based Trulieve Cannabis’ purchase of Arizona-headquartered Harvest Health & Recreation. The deal closed earlier this month.

When Trulieve’s all-stock purchase of Harvest was announced in May, it was valued at $2.1 billion and billed as the largest U.S. marijuana transaction to date.

John Schroyer can be reached at john.schroyer@mjbizdaily.com.