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Trulieve To Acquire Harvest Health & Recreation For $2.1 Billion

May 11, 2021

Tallahassee, Florida-based Trulieve Cannabis and Phoenix, Arizona-based Harvest Health & Recreation have entered into a definitive agreement for Trulieve to acquire Harvest Health in full, merging the companies in a blockbuster transaction. Trulieve is the dominant force in its home state’s medical market, operating 82 dispensaries in Florida and outpacing its closest competition by a margin of more than 3:1, according to the Florida Office of Medical Marijuana Use. Harvest Health is a powerhouse in its own right, with operations in nine states, 39 retail locations, and strong revenue.

The transaction is estimated to be the largest in the history of the U.S. cannabis market. Representing a total consideration of approximately $2.1 billion, Trulieve will acquire all issued and outstanding shares of Harvest Health at $4.79 apiece, which amounts to a 34% premium over their closing price last week. Upon completion, Harvest Health shareholders will hold a stake of approximately 27% of the merged company, which will be known as Trulieve.

“This combination offers us the opportunity to leverage our respective strong foundations and propel us forward with an unparalleled platform for future growth,” stated Trulieve CEO Kim Rivers. “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.”

The combined business will have operations in 11 states, comprising 22 cultivation and processing facilities with a total capacity of 3.1 million square feet, and 126 dispensaries serving both the medical and adult-use recreational cannabis markets. If all facilities and operations are maintained going forward, the combined company will employ more than 7,500 staff. Trulieve expects to collect $858 million in annual revenue this year while Harvest projects its annual revenue to hit $379 million, setting the stage for the combined company’s revenue to exceed $1.2 billion this year.

The announcement yesterday coincided with Harvest’s latest earnings report covering the first quarter of 2021. The company saw clear upside from Arizona’s speedy path to recreational cannabis sales following last fall’s elections—first quarter net revenue totaled $88.8 million, up 27% from the quarter prior, and double revenue for the same period last year. Factoring in a net loss of $23 million, Harvest achieved an adjusted EBITDA of $26.9 million for the quarter.

“Our first quarter results show the benefits of reaching impactful milestones such as the launch of recreational sales in Arizona,” said Harvest CEO Steve White. “We are thrilled to be joining Trulieve, a company that has achieved unrivaled success and scale in its home state of Florida. As one of the oldest multi-state operators, we believe our track record of identifying and developing attractive market opportunities will add tremendous value to the combined organization as it continues to expand and grow in the coming years.”—Danny Sullivan

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