Verano, a US-based vertically integrated cannabis group backed by cannabinoid therapy developer Scythian Biosciences, agreed to an $850m acquisition by its peer Harvest Health and Recreation on Monday.
The all-stock transaction assumes a Harvest share price of C$8.79 ($6.57) and is set to close within the first half of the year. It is subject to customary closing conditions including shareholder approval.
Harvest and Verano have 30 days from the day of the binding agreement to enter into a definitive agreement, subject to a $20m termination fee if the deal is called off by either party.
Verano operates licensed cannabis cultivation and manufacturing facilities, produces a wide range of cannabis products such as edibles, extracts and concentrates, and owns dispensaries under the brand name Zen Leaf.
The company conducted a complex series of deals with Scythian Biosciences over the course of 2018 that resulted in the former becoming the owner of medical cannabis producer 3 Farm Boys.
Once the merger with Harvest closes, the combined business will own licences to operate up to 200 facilities across 16 states and territories, including 123 retail dispensaries.
Harvest will hire 300 staff, with a focus on minorities, women and military veterans, to help drive growth enabled by the acquisition. The corporate expects to own more than 70 dispensaries, 13 cultivation facilities and 13 manufacturing plants by the end of 2019.
Verano was formed in October 2018 with a $120m funding round led by Scythian, with participation from private equity firm Serruya Private Equity, consolidating the management of several existing businesses.
Harvest chairman Jason Vedadi said: “The combination with Verano fits perfectly with our vision of creating the world’s most valuable cannabis company.
“We are confident that this is an opportunity to continue to leverage each of our company’s strengths and drive continued shareholder value, while at the same time achieving the scale we know will give us a leadership position in one of the largest cannabis markets in the world.”
