Trulieve Snaps Up Keystone Shops For $60M; Street Remains Bullish

Trulieve Cannabis Corp. has agreed to acquire Keystone Shops from Anna Holding LLC for $60 million. This purchase adds three dispensaries to Trulieve’s national presence of 83 dispensaries.

Trulieve (TCNNF) CEO Kim Rivers said, “Trulieve continues to bolster our national expansion efforts with acquisitions that both complement our current portfolio and strengthen our long-term strategy.”

Rivers added, “The Keystone Shops are located in a densely populated area of Pennsylvania and with their staff’s knowledgeable and customer-centric approach to patients, these dispensaries are valuable additions to our Pennsylvania portfolio.” (See Trulieve stock analysis on TipRanks)

The consideration for the acquisition includes $40 million in Trulieve subordinate voting shares and $20 million in cash.

The shares issued in consideration have a lock up period of 18 months from the closing date of the transaction. Trulieve expects the transaction to close in 2Q, subject to closing conditions and regulatory approvals.

Additionally, Trulieve also announced a public offering of about 4.4 million subordinated voting shares. This underwritten offering also grants the underwriters a 30-day option to acquire an additional 660,066 shares.

The company plans to use the proceeds for business development and working capital requirements.

Last month, Needham analyst Matt McGinley reiterated a Buy rating on the stock and increased the price target to $60.75 (34.7% upside potential).

McGinley commented, “Trulieve is dominant in FL where it derives most of its revenue and profitability, and cash flow from this state provides a substantial source of funding for development in other markets. While Trulieve has had the best equity performance in its peer group with the stock +66% YTD, it still trades at a 15.9x EV/EBITDA multiple on our ’21 estimate.”

“We believe that the stock will rate higher on EBITDA growth, and believe the multiple is low for a company with such strong operating fundamentals,” McGinley added.

Turning to the rest of the Street, the stock has a Strong Buy consensus rating alongside an average analyst price target of $67.23 (49.1% upside potential), based on 9 unanimous Buys. Shares have gained about 384.9% over the past year.

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