Cannabis Co Greenlane Holdings And KushCo Holdings Move A Step Closer To Merger

Greenlane Holdings, Inc. GNLN and KushCo Holdings, Inc. KSHB are one step closer to finalizing their recent merger.

In March, the companies announced that KushCo had agreed to become a wholly-owned subsidiary of Greenlane under an all-stock deal.

On Tuesday, the companies reported the expiration of the 30-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 for the proposed merger.

"We welcome this latest development in the formation of the combined company and look forward to continued progress on the remaining steps required to complete the transaction," Nick Kovacevich, co-founder, chairman and CEO of KushCo, said. "We are excited to begin our work together and to begin realizing the potential opportunities and proposed synergies provided by this transformational combination to accelerate and execute on the significant market opportunities in our evolving industry."

The Merger Deal

Under the terms of the agreement, KushCo shareholders will receive roughly 0.2546 shares of Greenlane Class A common stock for each share of KushCo common stock held.

Greenlane Class C shares will be transformed into Greenlane Class B shares on a 3-to-1 basis, the companies confirmed earlier.

Once the merger is finalized, which is expected to take place in the third quarter of 2021, KushCo shareholders will hold approximately 49.9% of the combined company, while Greenlane shareholders will hold the remaining 50.1%.

In addition, Kovacevich opted to serve as CEO of the joint company upon closing the deal, while Greenlane's co-founder Aaron LoCascio will become president and Bill Mote CFO.

The board of the merged company will have seven members - four from Greenlane and three from KushCo.

The deal is expected to result in roughly $15 million to $20 million of yearly run-rate cost synergies in the 24 months following the closing of the transaction, driven by economies of scale. The newly combined company is poised to generate $250 million in pro forma revenue in 2020, with a market capitalization of over $350 million.

Kovacevich recently told Benzinga that the merger "puts us on scale with really anyone out there, from a size and infrastructure standpoint, and global reach." 

Photo by Tim Foster on Unsplash