Cannapany on May 4, 2021 No Comments
The cannabis operator closed on the purchase of KCR and HMS yesterday and today
Cannabis operator TerrAscend announced last month that it was negotiating to purchase two cannabis companies, GuadCo, LLC and KCR Holdings LLC. The companies are collectively known as KCR for the purpose of the transaction, which has now been successfully completed. TerrAscend confirmed yesterday that it had finalized the purchase and now adds more retail offerings to its Pennsylvania footprint.
TerrAscend made the acquisition for a total implied enterprise value of $70 million. The company had already held 10% of the collective KCR, purchasing the remainder for $63 million, which includes $36 million in stock, $20.25 million in cash and a note worth $6.75 million. The purchase price, according to TerrAscend, represents a mid-single digital multiple of the 2021 EBITDA (earnings before interest, taxes, depreciation and amortization) of KCR’s assets.
Jason Wild, Executive Chairman of TerrAscend, said of the acquisition, “With the closing of this acquisition, TerrAscend doubles our owned footprint to six dispensaries and further solidifies our leadership position as a branded manufacturer in Pennsylvania, where we distribute our products to 100% of the dispensaries in the Commonwealth.”
The new dispensaries are located in Bethlehem, Allentown and Stroudsburg, and will complement the company’s existing retail footprint in Southeastern Pennsylvania. In addition, the acquisition will allow TerrAscend to expand its retail operations and increase its margins through deeper vertical integration of its Kind Tree, Ilera and Prism brands.
TerrAscend has also completed another acquisition. It announced today that it finalized the purchase of HMS Health, LLC and HMS Processing, LLC, which it is purchasing from Curaleaf Holdings for $27.5 million. Wild said of this transaction, “We are thrilled to officially enter Maryland, a limited license medical cannabis market with strong long-term growth potential that is adjacent to our core Northeast markets of Pennsylvania and New Jersey. Our strong East Coast management team and corporate support functions are already in place and we expect to generate synergies by standardizing processes and introducing our portfolio of high-quality branded flower and manufactured products. We plan to scale our cultivation and processing capability to supply the underserved Maryland market while continuing to strategically evaluate opportunities to vertically integrate in the state.”
Congratulation!