Curaleaf Holdings, Inc. (OTCQX: CURLF) has successfully completed the previously announced acquisition of the European-based EMMAC Life Sciences Limited, a deal valued at approximately $50 million in cash and 17.5 million shares of Curaleaf. Curaleaf has simultaneously established Curaleaf International Holdings Limited in Guernsey to hold the EMMAC investment and further its European expansion.
In order to speed up the process of expanding Curaleaf International, Curaleaf said it has secured an investment of $130 million from a single strategic institutional investor in exchange for a 31.5% equity stake in Curaleaf International, implying a $413 million Post Money valuation, with $80 million in cash available to spend. The company said that the subscription will fund the entire cash portion of the EMMAC acquisition consideration of $50 million with the remaining $80 million to be used to fund Curaleaf International’s current capital expenditures plan through 2022, as well as its pipeline of potential acquisitions.
“The successful completion of our acquisition of EMMAC, and the formation of our new Curaleaf International business, marks a transformational launching point for our entrance into the European cannabis market,” said Boris Jordan, Executive Chairman of Curaleaf. “Building on our market-leading position in the U.S., this transaction establishes Curaleaf as the global, pure play, cannabis market leader by revenue and geographic reach. With our single strategic institutional investor, we have set a strong foundation for Curaleaf International’s future growth trajectory. On behalf of the Curaleaf Board of Directors and management team, we are thrilled to welcome Antonio Costanzo, co-founder, and CEO of EMMAC, as the CEO of Curaleaf International, and the entire EMMAC team to Curaleaf.”
This infusion of outside capital into Curaleaf International significantly accelerates Curaleaf’s expansion plans in Europe by fully funding Curaleaf’s cash outlay for the EMMAC acquisition and providing the capital required to support Curaleaf International’s near-term European rollout. With its foreseeable expansion budget fully funded, Curaleaf’s new international business can focus on executing its further European expansion. Curaleaf and the strategic investor have entered into a shareholders’ agreement regarding the governance of Curaleaf International pursuant to which Curaleaf will have control over operational issues as well as raising capital and the ability to exit the business. In addition, the strategic investor’s stake is subject to put/call rights which permits either party to cause the stake to be bought out by Curaleaf for Curaleaf equity starting in 2025.
“As the consumer and political liberalization trends around cannabis that are sweeping the U.S. are increasingly taking hold across Europe, our expansion into the international cannabis market presents tremendous new long-term growth opportunities for Curaleaf,” said Joseph Bayern, CEO of Curaleaf. “With the European population of nearly 748 million, the potential European addressable market is more than twice the size of the U.S. addressable market. With the ability to operate our new European business across country borders, with one or two cultivation sites and one manufacturing center to serve the entire region in most cases, combined with our ability to leverage the strength of our consumer packaged goods strategies and innovations from our U.S. operations, we see enormously positive implications for our ability to quickly and efficiently scale the business across Europe .”