Shares of Harvest Health & Recreation HRVSF jumped Monday after it agreed to be bought by Trulieve Cannabis TCNNF for about $2.1 billion, creating what the companies said would be the largest U.S. multistate cannabis firm.
Under the terms Trulieve, Tallahassee, Fla., will pay 0.117 share for each share of Harvest. The figure values shares of Harvest, Phoenix, at $4.79 each.
Harvest holders would get a total of 26.7% of the new company.
At last check Harvest shares advanced 19% to $4.25. They'd closed Friday's session at $3.58, up 7.2%.
"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," Trulieve Chief Executive Kim Rivers said in a statement.
"As one of the oldest multistate operators, we believe our track record of identifying and developing attractive market opportunities combined with our recent successful launch of adult-use sales in Arizona will add tremendous value to the combined organization as it continues to expand and grow in the coming years," Harvest CEO Steve White said.
The merger would “[bolster] Trulieve's expansion in U.S. Northeast and Southeast hubs in Florida, Pennsylvania and Maryland, and establishes a Southwest hub in core markets including Arizona, where recreational adult use of cannabis was recently legalized," Trulieve and Harvest said.
The combined business would operate in 11 states, including 22 cultivation and processing facilities with a total capacity of 3.1 million square feet and 126 dispensaries.
The combination's 2020 adjusted earnings before interest, taxes, depreciation and amortization would be $266 million. It would generate $1.2 billion in revenue this year, they estimated.
Cannabis mergers and acquisitions have ramped up recently, with 98 in the industry this year through the week ended April 30, Dow Jones reported.
Both boards have approved the deal. Harvest holders with more than half the voting power in te company have agreed to vote for the deal.
The deal is subject to conditions including court approval in British Columbia, regulatory clearances and a vote of Harvest holders.