Harvest Health agrees to revise its pending acquisition transaction with CannaPharmacy and receives additional capital.
Harvest Health & Recreation Inc, is a vertically integrated cannabis company with one of the largest and deepest footprints in the U.S. Under a new binding agreement, Harvest and CannaPharmacy have agreed to terminate their current agreement whereby Harvest would have acquired CannaPharmacy's right to own or operate cannabis licenses in Pennsylvania, Delaware, New Jersey and Maryland.
Under the new agreement with CannaPharmacy and subject to regulatory approvals, Harvest will only acquire Franklin Labs, LLC, a subsidiary of CannaPharmacy, for $26,000,000 payable with $15,000,000 in cash and an $11,000,000 promissory note. Alternatively, upon completion of additional due diligence and subject to certain closing conditions, the parties may elect consideration consisting of certain other cannabis assets and a reduced cash payment of $8,000,000.
The aggregate purchase price in either scenario is well below the purchase price in the previous agreement which consisted of $88,000,000 in cash, plus Harvest stock. Franklin Labs owns and operates a 46,800 sq. ft. cultivation and manufacturing/processing facility in Reading, Pennsylvania.
The revised agreement is due, in part, to accommodate Harvest's plans to more strategically align with Harvest's operational needs, which have evolved since the previously announced acquisition of CannaPharmacy. The acquisition of Franklin Labs is expected to allow Harvest to more efficiently scale operations in Pennsylvania and provide dispensaries and patients in that state with access to Harvest's intellectual property, high-quality products, and trusted retail experiences.
The acquisition is subject to, among other things, the execution of definitive agreements, the receipt of regulatory approvals and the satisfaction or waiver of closing conditions customary for a transaction of this nature.
"These transactions come at a key strategic time for Harvest, as we're working to scale our operations in key markets and to enhance our ability to pivot and fulfill product demands for our patients and consumers," Harvest Executive Chairman Jason Vedadi.
"A critical aspect of our long-term strategy is a sharp focus on operational excellence as we build out new facilities and enhance existing ones in 2020.
This revised agreement and attractive funding sources will help us toward achieving our revenue and profitability goals, delivering on our promise to increase shareholder value and ultimately fuel Harvest's continued growth and success."
Separately, Harvest has received loan proceeds of both CAD $35 million and CAD $27.5 million, totaling CAD $62.5 million. This additional capital will help fuel Harvest's return to profitable growth and expansion.
In regard to the previously announced transaction with Torian Capital Partners ("Torian"), both parties have decided not to proceed with the financing.
To learn more about Harvest Health & Recreation visit their Company HQ here.
Disclaimer: Past performance is not an indicator of future performance.
Disclaimer: past performance is not an indicator of future performance
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