Harvest stockholders will receive 0.117 of a subordinate voting share of Trulieve for each Harvest share they hold. Based on Friday's closing price for Trulieve, the deal is valued at $2.1 billion. That rate implies a price of $4.79 per share for Harvest, 34% above its closing price Friday.
"[O]ur companies share similar customer values with a focus on going deep in core markets," said Trulieve CEO Kim Rivers in their joint press release. "This combination offers us the opportunity to leverage our respective strong foundations and propel us forward with an unparalleled platform for future growth."
While both companies are well-known multistate operators (MSOs), separately their geographic footprints are quite limited. One powerful effect of combining them will be to produce an entity with a dramatically wider presence on both U.S. coasts. The post-merger Trulieve will be active in 11 states, operate 126 dispensaries, and own 3.1 million square feet of cultivation and production facilities. In short, it will be a new cannabis industry powerhouse.
The acquisition has been unanimously approved by the boards of directors of both companies. It will require a two-thirds majority approval by Harvest shareholders to move forward. Given the share price premium they are being offered, it's hard to imagine many will vote against it.
Separately on Monday, Harvest published its first-quarter financial results. Revenue was $88.8 million, up 101% on a year-over-year basis and 27% from the previous quarter. While non-GAAP (adjusted) EBITDA rose almost 200% quarter-over-quarter to $26.9 million, the company's net loss deepened to nearly $23 million from Q1 2020's $15.5 million.
Shares of Harvest climbed nearly 13% on Monday, against the 1% dip of the S&P 500 index. Trulieve's stock closed 5.7% lower.