- Harvest Health and Recreation (CSE:HARV) has announced the termination of a business combination agreement with Verano Holdings
- In April 2019, Harvest Health announced plans to acquire Verano Holdings for a total price of approximately C$1.2 billion
- The company cited a number of reasons for the termination of the agreement
- Neither party requires a breakup fee from the other for the termination
- Harvest Health and Recreation (HARV) is down 11.73 per cent to $1.43 per share, with a $134.66 million market cap
Harvest Health and Recreation (CSE:HARV) has announced the termination of a business combination agreement with Verano Holdings.
In April 2019, the company announced the agreement, which would have created the largest multi-state cannabis operator in the US.
Under the terms of the agreement, Harvest was to acquire Verano in an all-stock transaction. Based on a Harvest share price of $8.79, the transaction would have been worth roughly C$1.2 billion.
The transaction would have also included Verano’s range of pipeline acquisitions, collectively worth $50.67 million.
Both companies hoped that the combination of businesses would offer scale-up opportunities not available to either party on their own. The resulting entity would have been able to operate 200 facilities in 17 US states, including 123 retail dispensaries.
However, prolonged difficulty in meeting state and local regulatory requirements, adverse capital market conditions, and a challenging environment for asset sales ultimately contributed to the collapse of the deal.
Neither party is required to pay breakup fees or other considerations relating to the agreement.
Harvest Health’s CEO, Steve White, said that, given the persistent challenges in consummating the deal, both companies thought it prudent to move forward separately.
“We remain focused on continued development of assets in our core markets including Arizona, Florida, Maryland, and Pennsylvania.
“Recent capital-raising efforts have afforded the company sufficient resources to continue investing in strategic projects while moving toward profitability,” he added.
Verano Holdings CEO, George Archos, also noted that they did not come to the decision lightly.
“With COVID-19 being dealt with in the very agencies that must approve the transaction, it has become clear that this combination would not be completed within the established timeframe,” he said.
Harvest Health and Recreation (HARV) is down 11.73 per cent to $1.43 per share at 12:57pm EST.
