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Curaleaf Expands In Western U.S. With $286 Million Tryke Acquisition

November 9, 2021

Wakefield, Massachusetts-based Curaleaf Holdings has entered a definitive agreement to acquire Tryke Companies for $286 million, bolstering its presence in the western part of the U.S. Tryke is more recognizable by its retail brand, Reef Dispensaries, operating four retail locations in Nevada and two in Arizona, including locations on the Las Vegas Strip and in the Phoenix metropolitan area. It’s also been active in shaping Utah’s nascent medical program. Tryke expects to record approximately $110 million in full-year 2021 revenue.

The Tryke deal is relatively modest in size compared with Curaleaf’s blockbuster $700 million acquisition of Grassroots Cannabis in 2020, which catapulted the company into 23 states. Nonetheless it highlights the lofty pricing that existing operations can command in high-growth states like Nevada and Arizona, as well as the premium companies are increasingly placing on expanding their product and dispensary portfolios. Curaleaf now has 111 retail locations nationwide.

“This strategically and financially compelling transaction will expand our U.S. presence by bringing additional premium products to our consumers and retailers in Nevada, Arizona and Utah, all while yielding meaningful benefits for all of our stakeholders,” said Curaleaf founder Boris Jordan. “We expect the acquisition to be immediately accretive to our EBITDA margins and free cash flow generation upon closing.”

Under the agreement, Curaleaf will pay $40 million in cash on the transaction’s close, with an additional $75 million cash to be paid in equal installments on the subsequent three anniversaries of that date. The stock portion of the transaction will also be paid out on those three anniversaries in a similar fashion. An additional stock-based earnout may be paid in 2023 based on meeting certain EBITDA targets next year. Upon closing, Curaleaf will assume ownership of Tryke’s portfolio of processing licenses and expects to expand its cultivation capacity from 30,000 square feet to over 80,000 square feet over the next three years.

Meanwhile, Curaleaf posted revenues up 74% year-on-year to $317 million for its fiscal third quarter ended in September, with adjusted EBITDA rising 69% to $71 million. “We continued to set ourselves apart with the introduction Cliq by Select in the third quarter, while also expanding our innovative Select Squeeze and Nano Bites products to new markets,” said CEO Joe Bayern.

Select Squeeze, a THC-infused “beverage enhancer,” launched in Michigan, New Jersey, and New York during the quarter, while the Cliq by Select premium vape system rolled out across Arizona, California, Nevada, and Oregon, with additional markets to follow by year-end.—Danny Sullivan

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