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Curaleaf acquires Cura Partners in blockbuster billion-dollar deal to become largest cannabis company in the US

U.S. owned and operated Curaleaf Holdings, Inc. (CSE:CURA) (OTCQX:CURLF), a multi-state cannabis operator based out of Massachusetts announced on Wednesday the company signed a blockbuster deal to acquire cannabis oil company Cura Partners in an all-stock transaction worth CA$1.27 billion ($948.8 million). To date, it’s the largest acquisition of its kind in the cannabis industry, positioning Curaleaf as one of the dominant players in the legal marijuana space in the U.S.

The deal gives Curaleaf — who recently signed an agreement with CVS to sell hemp products in the pharmacy chain — an entryway into the West Coast cannabis market, where Cura Partners sells its popular line of Select Brand cannabis oils to over 900 retailers in California, Nevada, and Oregon. It’s a unique merger of two competing ideas as well, with Curaleaf heavily invested in the wellness sector and Cura Partners and lifestyle brand powerhouse.

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"The transformational acquisition of Cura and the Select brand is another step in our journey to create the most accessible cannabis brands in the U.S.," said Joseph Lusardi, CEO of Curaleaf in a statement released Wednesday. "The combination of Curaleaf and Select is a perfect fit.

A recent investor presentation and phone call showed how the newly formed company will command both coastlines in the U.S., with a strong presence in at least 15 states. Lusardi expects to have 70 retail stores by the end of 2019, not including the distribution power of the Select Brand, which gives the company access to the 900 merchants as mentioned earlier across the country.

Together, the two companies will work to cut costs, according to what was said at the presentation, with Lusardi forecasting a 25 percent drop in processing costs combined with a cut in material costs for Select of at least 50 percent.

“With our industry-leading capacity, expansive retail distribution network and Select's impressive sales and marketing capabilities, we intend to meaningfully accelerate our topline growth trajectory with the addition of the Select Oil product range,” Lusardi continued in his statement. “In addition, we intend to create significant operational synergies from the integration of Select's wholesale business with our vertically-integrated cultivating, processing and retail platform.”

Curaleaf’s deal comes on the heels of Canopy Growth Corporation’s (CGC) agreement to purchase Acreage Holdings (ACRGF) for $3.4 billion. While the John Boehner-backed company’s cross-border deal may be valued at three times as much money, Acreage will be forced to wait until the U.S. legalizes cannabis before that agreement goes into effect.

The immediacy of the Curaleaf deal makes it that much more important in the eyes of many experts.

“There should exist substantial revenue synergies as CURLF brings the Select brand east into markets where it has built a strong retail presence,” wrote one analyst for Seaport Global on the deal.

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Similar praise was echoed around the sector.

"I could not be more excited about this transaction with Curaleaf and what it means for the Select brand and for our industry,”  said Cameron Forni, CEO of Cura and founder of Select in a statement. “The leading companies in the industry on the West Coast and the East Coast are now joining forces to progress the legalization and mainstream acceptance of cannabis across the country."

The deal is expected to close sometime this year. Curaleaf Holdings closed up 0.12 percent on Thursday at $11.11 on the OTC markets.  

(Photo - Curaleaf Facebook/ Video - CNBC's Melissa Lee and the Fast Money traders, Tim Seymour, Dan Suzuki, Dan Nathan, and Guy Adami/ YouTube)
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