Curaleaf Holdings, Inc. (OTCQX: CURLF) is buying Arizona-based Bloom Dispensaries in an all-cash transaction valued at approximately $211 million. The deal is expected to close in January 2022, subject to customary approvals and conditions. Curaleaf said that Bloom has an attractive financial profile, generating expected 2021 revenue of approximately $66 million and EBITDA margins of more than 40%. The purchase is following Curaleaf’s recent announcement that it had received commitments for a private placement of 8.0% Senior Secured Notes due 2026 for aggregate gross proceeds of $425 million.
“Bloom has built a strong and profitable business, and we believe the combination of our two companies will enhance our competitive position and ability to continue gaining share in the highly attractive Arizona market,” said Joseph Bayern, CEO of Curaleaf.
The proposed acquisition with Bloom includes four retail dispensaries located in the cities of Phoenix, Tucson, Peoria, and the only dispensary currently in Sedona, with a combined population of over 2.3 million and drawing millions of tourists every year. In addition, Bloom strengthens Curaleaf’s production capabilities in Arizona with the addition of two adjacent cultivation and processing facilities located in north Phoenix totaling approximately 63,500 sq. ft. of space. Following the close of Bloom and the previously announced acquisitions of Tryke Companies and Natural Remedy Patient Center, Curaleaf’s retail footprint will increase to 16 dispensaries in Arizona and 128 nationwide.
Curaleaf will pay $51 million in cash at closing, with the remaining approximately $160 million paid in three promissory notes of $50 million, $50 million, and $60 million due, respectively, on the first, second, and third anniversary of the closing of the transaction. The notes will be recourse only to the shares and assets of Bloom and will not be guaranteed by any Curaleaf entity.
“We are pleased to continue Curaleaf’s expansion in the state of Arizona with the acquisition of Bloom,” said Boris Jordan, Curaleaf’s Executive Chairman. “In addition to bolstering our strong position in this key growth market with an attractive portfolio of retail and cultivation assets, Bloom will be immediately accretive to our adjusted EBITDA margins upon close. On behalf of the Board of Directors and management team, I look forward to welcoming Bloom to the Curaleaf family.”
Curaleaf currently operates in 23 states with 117 dispensaries, 25 cultivation sites, and employs over 5,200 workers.