Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) is changing the terms of its prior agreement to acquire Select’s state-regulated cannabis business.
Back in May, Curaleaf said it was going to acquire Select’s business including Select’s manufacturing, processing, distribution, marketing and retailing operations and all adult-use and medical cannabis products marketed under the Select brand name, including all intellectual property.
The company said in a statement, “Due to changes in market conditions since the original merger agreement was signed in May, Curaleaf and Select have mutually agreed to reduce the base consideration payable upon close under the Proposed Transaction.”
Curaleaf announced, “The number of subordinate voting shares of Curaleaf payable at closing of the Proposed Transaction has been reduced to 55 million shares of Curaleaf from 95 million originally. The remaining 40 million voting shares will now be payable to Select equity holders contingent upon Curaleaf achieving certain calendar year 2020 revenue targets based on Select-branded retail extract sales beginning at a target of $130 million with maximum achievement at $250 million.”
The company went on to say, “In addition, Select equity holders will also be eligible to receive an earn-out of up to $200 million from the issuance of additional SVS, contingent upon Curaleaf exceeding $300 million in calendar year 2020 revenue for Select-branded retail extract sales.”
“The amended terms of the acquisition that we have agreed to with Select reflect our commitment to executing a prudent investment strategy that is in the best interests of our shareholders. We remain extremely confident in the strength and operations of the Select business and of the long-term prospects of the cannabis sector as a whole. We look forward to bringing our companies together to lead this industry as it continues to mature and grow,” said Curaleaf CEO Joseph Lusardi. “Expiration of the HSR waiting period was a key milestone in closing this transaction and we continue to work with state regulators to receive the necessary approvals with a target closing date of January 1, 2020.”
Additionally, Curaleaf also announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired with respect to the acquisition of Select by Curaleaf.