Trulieve Cannabis (TRUL) announced Monday it would be acquiring Harvest Health & Recreation Inc. in an all-stock deal valued at approximately C$2.1 billion. Trulieve is a multi-state cannabis operator that focuses on the northeast and southeast regions of the United States, while Harvest Health focuses on the west coast and northeast regions.
For each share of Harvest held, investors will receive 0.1170 of a Trulieve subordinate voting share. The transaction implies a price per share of $4.79 to Harvest shareholders, a premium of 34% over Friday’s closing price. Harvest shareholders will own about 26.7% of the resulting entity.
Trulieve’s CEO Kim Rivers said, “Today’s announcement is the largest and most exciting acquisition so far in our industry, creating the most profitable public multi-state operator. Importantly, our companies share similar customer values with a focus on going deep in core markets. This combination offers us the opportunity to leverage our respective strong foundations and propel us forward with an unparalleled platform for future growth. 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 merged entity is expected to have operations in 11 states with a total capacity of 3.1 million square feet and 126 dispensaries, including 22 cultivation and processing facilities. (See Trulieve Cannabis stock analysis on TipRanks)
On April 30, Cantor Fitzgerald analyst Pablo Zuanic reiterated a Buy rating on TRUL while raising its price target to $89.00 (C$107.89) for a 121.5% upside potential.
Zuanic said about Trulieve, “They are the largest operator in Florida. First of all, it’s an MSO, because they operate in other states. But for practical purposes, it’s an SSO — single-state operator — because close to 95% of their sales come from Florida. But because Florida does not have caps on licenses for stores or cultivation, once you have a license to operate in the state, they can have as many stores and as much cultivation as they want. At the moment, Trulieve has 50% market share of Florida. There’s no other MSO that has 50% share with a state.”
The rest of the Street is bullish on TRUL with a Strong Buy consensus rating, based on 9 Buys. The average analyst price target of C$85.14 implies a 74.8% upside potential to current levels.
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