Trulieve Cannabis aims to purchase Harvest Health & Recreation Inc. in a $2.1 billion, all-stock exchange. If this deal goes through, it will put Harvest Health on the map as an authoritative brand in the cannabis market.
More specifically, the combined forces of Trulieve and Harvest Health would have dominant markets in Arizona and Florida. With Arizona recently legalized and Florida’s medical cannabis market growing, the potential revenue here is huge. Furthermore, the company would have a leading footprint in Pennsylvania, Maryland and another seven states.
Not to mention, the combination of these brands would create one of the largest cannabis companies in the world. Some analysts have estimated that the 2021 revenue from both companies is close to $1.24 billion, with most of the revenue coming from Trulieve.
“Today’s announcement is the largest and most exciting acquisition so far in our industry, creating the most profitable public multi-state operator. Importantly, our companies share similar customer values with a focus on going deep in core markets. This combination offers us the opportunity to leverage our respective strong foundations and propel us forward with an unparalleled platform for future growth,” Kim Rivers, chief executive officer of Trulieve said in a press release.
“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. We look forward to providing best-in-class service to patients and customers on a broader national scale as we create an iconic US cannabis brand.”
The announcement is also big news for cannabis investors. Every share of Harvest Health would also receive 0.117 shares of Trulieve. As of May 10, Trulieve’s stock was down 2.3 percent to $40, whereas Harvest Health’s was up 17 percent to $4.18.
Stifel GMP analyst Andrew Partheniou noted that this would be the largest cannabis transaction in United States history. He also mentions that Trulieve has famously traded at lower prices to peers, being that its center of attention is in Florida.
While this deal is still in the early works, it’s expected that Harvest Health will come forward with approval in the third-quarter of this year.
With cannabis legalization sprawling all around us, you can expect that demands are growing at a much faster pace than the industry can handle. Luckily, this is to be predicted and giants such as Trulieve are able to maneuver through this ever-changing landscape.