Ayr Strategies (OTCQX: AYRSF) announced it is buying a vertically integrated operation in Arizona, including cultivation and processing facilities and three licensed dispensaries in a deal valued at $81 million. The deal will be made up of $10 million in cash, $41 million in stock (approximately 2.75 million shares priced at 10-day VWAP prior to announcement), and $30 million in seller notes. An additional 2 million shares may be payable upon the achievement of established cultivation targets through 2021 and 2022.
“Arizona has been a terrific medical market, third in the U.S. in terms of patient penetration at 3.4% and currently generating approximately $800 million in annual revenue. Yesterday, voters decided to make it a recreational use market as well. We are thrilled to be able to leverage our experience, talent, brands, and success in Nevada and Massachusetts to bring quality and choice to the Arizona market,” said Jonathan Sandelman, Chairman and Chief Executive Officer of Ayr. “In addition to great operating assets, we are bringing on great talent, adding 110 people to the Ayr team. Now in five states and highly cash-flow generative, we are positioning ourselves as one of the top multi-state operators in the U.S.”
The Arizona properties include three licensed dispensaries in greater Phoenix, two in Chandler and one in Glendale, a 10,000 ft 2 licensed cultivation and processing facility in Chandler, and an 80,000 ft 2 licensed cultivation facility under development in Phoenix. This acquisition puts Ayr Strategies in five key states. Including the pending transactions, Ayr will have operations in Massachusetts, Nevada, Pennsylvania, Ohio and Arizona.
Following the closing of the announced acquisitions in Arizona, Pennsylvania, and Ohio, Ayr will address a population of approximately 43 million people across five states. In total, the company said it will operate or provide services to 11 dispensaries, with eight further dispensary licenses expected to become operational in 2021, and over 140,000 ft 2 of active cultivation and processing space, with the ability to expand to approximately 600,000 ft 2.
Mr. Sandelman continued, “Today’s announcements represent the next step in the disciplined and targeted expansion of our footprint. We’ve always looked to go deep in the best markets, targeting attractive assets in limited-license states with large populations, and where we can build a vertically integrated presence and continue adding to our deep talent pool. Importantly, it needs to be at the right price. This transaction allows us to enter a thriving and robust market at 3.7x 2021 estimated Adjusted EBITDA, generating significant value for our shareholders.”
Ayr Strategies is near the top of its 52-week high. Shares were lately selling at $14.88, not far from the year top of $15.60.