Curaleaf Bolsters Presence In Three Key Growth Markets Via $286M Acquisition Of Tryke Companies

Cannabis giant Curaleaf Holdings, Inc. CURA CURLF announced Monday that it has entered into a definitive agreement to acquire Tryke Companies, which is doing business as Reef Dispensaries.

Deal Details

Under the deal, the Wakefield, Massachusetts-based company agreed to purchase a privately held vertically integrated, multi-state cannabis operator for $286 million in cash and stock.

The price tag includes $40 million in cash, which Curaleaf agreed to pay at closing; $75 million in cash to be paid in equal installments on the first, second and third anniversaries of the closing and a stock portion of the transaction consisting of 17 million subordinate voting shares of Curaleaf, also to be paid in three equal installments under the same conditions.

In addition, an incremental earnout of up to 1 million Curaleaf shares may be paid in 2023 based on the business exceeding certain EBITDA targets for the year 2022.

The transaction, which is subject to customary approvals and conditions, is expected to close in the second half of 2022.

What It Means For Curaleaf

The acquisition includes Tryke's six heavily trafficked dispensaries under the Reef brand with two retail stores in Arizona and four in Nevada, including the Phoenix metropolitan area, Las Vegas strip and North Las Vegas, with products sold in over 50 additional locations across its footprint.

The deal also brings a wide variety of Tryke's in-house and third-party flower, concentrates, vape cartridges, edibles, topicals and CBD products at a range of price points creating a product portfolio that is highly complementary to Curaleaf's, allowing it to offer consumers and retailers in Arizona, Nevada and Utah an even broader selection of premium cannabis products.

Honigman LLP and Stikeman Elliott LLP acted as legal advisors to Curaleaf. Wilmer Cutler Pickering Hale and Dorr LLP and McCarthy Tétrault LLP acted as legal advisors, and Canaccord Genuity acted as financial advisor to Tryke.

What's Next?

The transaction significantly improves Curaleaf's margins and ability to generate cash flow, considering that Tryke is expected to record nearly $110 million in full-year 2021 revenue.

Curaleaf expects the acquisition to be immediately accretive to its EBITDA margins and free cash flow generation.

"This strategically and financially compelling transaction will expand our US presence by bringing additional premium products to our consumers and retailers in Nevada, Arizona, and Utah, all while yielding meaningful benefits for all of our stakeholders," Boris Jordan, founder and executive chairman of Curaleaf said.

CEO of Tryke Companies, Adam Ryan said, "Tryke is excited to bring its full suite of multi-price point products to an expanded base of consumers across the country."

More recent news from Curaleaf:

• Curaleaf International Rebrands To European Market, Expects It To Reach $3.71B By 2025
• Curaleaf Announces Roll Out Of Fab 5 Freddy, Bernard Noble Brand And CBN Bites
• Curaleaf's Select Brand And Rolling Stone's Cannabis Product Line Soon Available In CA, AZ And MA

CURLF Price Action

Curaleaf's shares traded 11.65% higher at $10.06 per share after the market close on Friday.

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