Cannabis packaging and accessories makers Greenlane Holdings (GNLN) - Get Greenlane Holdings Inc. Report and KushCo Holdings (KSHB) on Wednesday said they have agreed to merge in an all-stock transaction that will value the combined company at more than $400 million.
Under the terms of the deal, KushCo shareholders will receive about 0.2546 a share of Greenlane Class A common stock for each share owned, equal to a 6.3% premium over KushCo's 20-day volume weighted average closing price ending on Tuesday.
KushCo shareholders will own about 49.9% of the coming company, with Greenlane owning the remaining 50.1%, the companies said. Neither company is what is referred to in the industry as a “plant touching” operation that distributes actual cannabis.
KushCo sells cannabis-related packaging such as pre-filled vape cartridges and child-resistant caps, papers and wraps, which are primarily bought by multistate operators and other pot companies.
Greenlane, which has a small packaging business, also sells water pipes, rolling papers and other cannabis accessories, including via direct-to-consumer channels.
The transaction comes as some states including New York and New Mexico move forward with plans to legalize adult-use marijuana. It also comes amid expectations that the federal government under a Democrat-controlled Congress could make cannabis legal across the U.S.
KushCo co-founder and CEO Nick Kovacevich will become CEO of the new company, while Greenlane's Bill Mote will be chief financial officer. The deal is expected to close in the late second quarter or early third quarter. The merged company will continue to trade publicly in New York as Greenlane.
At last check, Greenlane shares were up 23.47% at $5.05. KushCo shares were up 7.46% at $1.22.