TerrAscend To Acquire Gage Growth In $545M All-Stock Deal, Reaching Third Largest Cannabis Market In The U.S.

TerrAscend Corp. TER TRSSF, and Gage Growth Corp. GAGE GAEGF revealed Wednesday that they have entered into a definitive agreement, under which TerrAscend will acquire all of the issued and outstanding subordinate voting shares of Gage for around $545 million.

Under the deal, Gage shareholders will receive 0.3001 of a common share of TerrAscend for each Gage share held, representing a total consideration of approximately $545 million based on TerrAscend's August 31, 2021 closing price. The exchange ratio implies a consideration of $2.11 (or CA$2.66) per Gage share, representing a 18% premium based on the closing prices of both companies' shares on the Canadian Securities Exchange on August 31, 2021.

Upon completion of the transaction, the combined business will have operations in five states and Canada, including 7 cultivation and processing facilities and 23 operating dispensaries serving both medical and adult-use cannabis markets in the U.S. and Canada.

Management Commentary

"The acquisition of Gage expands our footprint to the third largest cannabis market in the U.S.," Jason Wild, executive chairman of TerrAscend stated. "Combining our market-leading share in our existing states with Gage's proven cultivation, retail, and marketing capabilities, creates one of the largest and most dynamic companies in the industry. We look forward to leveraging Gage's profound connection with Michigan's consumers, in addition to its established partnerships with award-winning brands like COOKIES, to provide our patients and customers with best-in-class product offerings and retail experiences."

Key Transaction Highlights And Benefits

If consummated, the transaction is anticipated to result in the following benefits:

• Leadership in a top third market – Michigan.
• Access to Gage's much sought-after brand and proprietary library of genetics as well as Gage's exclusive licensing partnerships in Michigan with COOKIES, SLANG Worldwide, Blue River, Pure Beauty and Khalifa Kush.

• The combined company will operate 7 cultivation facilities, including 3 cultivation facilities in Michigan, in addition to Gage's 9 contract grow agreements.

• The combined company will operate a retail network expected to reach 34 stores over the coming months.
• Balance sheet strength - Gage's $32.8 million cash position with minimal debt as of June 30, 2021, combined with TerrAscend's strong balance sheet positions the combined company to execute on its growth plans.

Price Action

TerrAscend shares were trading flat at $7.04 per share at the time of writing Wednesday morning.

Photo: Courtesy of TerrAscend