TerrAscend could soon have three new dispensaries in Pennsylvania

TerrAscend could soon have three new dispensaries in Pennsylvania

The cannabis company is negotiating the acquisition of two Pennsylvania cannabis companies

Cannabis operator TerrAscend already has an established presence in Southern Pennsylvania, but it could soon add new properties to its portfolio. It announced today that it has signed a definitive agreement to acquire two in-state operators that, once the acquisitions are complete, would give the company three additional properties. The acquisitions are reported to be worth a combined value of $70 million.

TerrAscend has negotiated the purchase of GuadCo, LLC and KCR Holdings LLC, collectively known as KCR. Once finalized, the purchase will give the operator new stores in the Pennsylvania cities of Allentown, Bethlehem and Stroudsburg, expanding TerrAscend’s footprint in the state. The company expects to close the transactions sometime during the current quarter and explains that they will be “immediately accretive upon closing.”

Asserts TerrAscend Executive Chairman Jason Wild, “The Pennsylvania medical cannabis market is a key focus for the Company. This transaction doubles our owned footprint to six dispensaries in the state and provides patients in Pennsylvania’s Northeast region access to TerrAscend’s outstanding products, service, and support. This expanded retail footprint further solidifies our position as the leading branded cultivator and manufacturer in Pennsylvania.”

TerrAscend already controls 10% of KCR and will acquire the remaining 90% through a mix of stock, cash and credit. It is offering $36 million in stock, $20.25 million in cash and a $6.75-million note and the purchase price will appear as a “mid-single digit multiple of KCR’s 2021 EBITDA (earnings before interest, taxes, depreciation and amortization).

The latest acquisitions follow TerrAscend’s latest earnings report, provided at the end of March. The company reported a year-on-year increase in net sales of 134% as it took in $198 million in 2020 and also saw $33 million in cash flow from operations, a substantial improvement over the $48 million loss reported a year earlier. Wild said at the time, “Looking at our growth plans for 2021, we are well-positioned to continue our momentum. The business is firing on all cylinders and we are only now just beginning to realize the benefits of our recently completed investments. Sales from facility expansions in Pennsylvania, New Jersey, and California are just starting to come to market, our acquisition in Maryland is expected to close imminently, and two additional retail stores are set to open in New Jersey.”