Massachusetts-based cannabis company Curaleaf Holdings announced Wednesday it agreed to purchase a leading West Coast cannabis oil manufacturer, Cura Partners, in an all-stock deal valued at about $950 million.
Curaleaf’s move to acquire Cura Partners, which owns Select, the leading cannabis brand in California, Nevada and Oregon, according to independent market analytics, marks the largest deal based on dollar value so far between U.S. cannabis operators. The companies also stressed it will combine Curaleaf’s East Coast footprint with a West Coast-focused Cura Partners to create the largest U.S. cannabis company by market cap and combined 2018 sales.
“The combination of Curaleaf and Select is a perfect fit,” Curaleaf CEO Joe Lusardi said. “With our industry leading capacity, expansive retail distribution network and Select’s impressive sales and marketing capabilities, we intend to meaningfully accelerate our top line growth trajectory with the addition of the Select Oil product range.”
The deal follows a wave of consolidation and deals in the cannabis space that was headlined two weeks ago by an agreement reached between Canada’s Canopy Growth and U.S. multi-state operator Acreage Holdings. That deal, which was valued at $3.4 billion on the day the agreement was announced, provided a path for Canopy to access the U.S. cannabis market, which is roughly 10-times as large as Canada’s. The agreement, however, is contingent on whether the sale of cannabis in the U.S. becomes federally permissible.
After an expected close to the Curaleaf-Cura Partners deal in 2019, the combined company will have a presence in at least 15 states. The merger is expected to help drive cost savings, including a 25% reduction in processing costs and a 50% drop in Select’s material costs, according to Lusardi.
Curaleaf shares, which trade over the counter, were up more than 15% Wednesday afternoon following the deal’s announcement.
Watch Curaleaf CEO Joe Lusardi discuss the Cura Partners acquisition in a a live interview on YFi PM above.