It’s official. Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) and Harvest Health & Recreation Inc. (CSE: HARV, OTCQX: HRVSF) have completed their deal and are now the largest U.S. cannabis operator across a combined retail and cultivation footprint. The deal was valued at $1.2 billion and was announced in May 2021.
Harvest shares will be delisted from the Canadian Securities Exchange at the close of trading on October 4, 2021. Harvest shareholders each received 0.1170 of a subordinate voting share of Trulieve for each subordinate voting share of Harvest held.
“The closing of this transaction marks a transformational milestone in our company’s history and positions Trulieve as the leading medical and adult-use cannabis operator in the U.S.,” stated Kim Rivers, Chief Executive Officer at Trulieve. “I thank all our employees, both Trulievers and Harvesters, for their tireless efforts during this process. The combined footprint provides Trulieve with a solid foundation for continued growth and scale. We look forward to fully integrating Harvest as we continue to execute on our hub strategy in the U.S., creating an unrivaled brand and reputation in the marketplace and value for our shareholders.”
The combination of the two companies leads to one of the largest revenue producers in the cannabis industry. Trulieve alone delivered revenues of $215.1 million in the second quarter. It is one of the few large producers that are also profitable having reported net income of $40.9 million in the second quarter and an adjusted EBITDA of $94.9 million. For its part, Harvest reported revenues of $102.5 million, while its net loss before non-controlling interest was $19.2 million, and Adjusted EBITDA2 of $28.0 million. Together the two could have reported $317.6 million in revenue for the second quarter, the highest among U.S. public reporting cannabis companies. The combined companies are also sitting on a comfortable cushion of cash. Harvest brings to the table a solid cash booty of $289.0 million, as of June 30, 2021, while Trulieve brings a recently announced $350.0 million debt financing. Harvest is also contributing $55 million in proceeds from the sale of its Florida license.
“This combination brings together two companies with depth and scale in key markets, providing a platform for growth for years to come,” said Steve White, CEO of Harvest. “Trulieve’s customer centric values match well with Harvest’s dedication to improving lives through the goodness of cannabis.”
After the market closed on Thursday, Trulieve nnounced that it had received commitments for a private placement of 8% Senior Secured Notes due 2026 for aggregate gross proceeds of $350.0 million. Rivers said,“Our strong balance sheet and profitability allowed us to secure a cost of senior debt which we believe is the lowest for a public cannabis company to date. This financing will provide capital to retire a portion of Harvest’s debt when we complete our acquisition and will allow us to use our combined cash on hand to aggressively pursue strategic growth initiatives across key markets post-closing.”
Together the combined companies will command a retail network of 149 dispensaries across 11 states and three strategic regional hubs, with market-leading positions in Arizona, Florida, and Pennsylvania. Trulieve will also be able to feature Harvest’s products in its stores.