Emerald Holdings Buys MJBiz For $120M, Signaling Widespread Acceptance Of Booming Cannabis Industry

MJBiz confirmed Tuesday it has been acquired by the New York-headquartered b2b event and media company Emerald Holding Inc. EEX for $120 million in cash plus potential earnouts.

The deal includes MJBiz Con, one of the oldest and largest cannabis-focused trade shows, as well as related media and event brands such as award-winning publications MJBizDaily, Hemp Industry Daily and MJBizMagazine. In October, MJBiz Con in Las Vegas gathered more than 1,200 exhibitors and 27,000 attendees.

The acquisition also includes The Emerald Conference - a cannabis science event that MJBiz acquired in 2021.

“MJBiz’s leading event and content portfolio, coupled with their 365-day engagement platform – which connects the entire cannabis supply chain – will diversify our collective product offerings, enhance our growth profile and enable us to deliver even greater value to our customers over the long term,” Hervé Sedky, Emerald’s president and CEO said.

Why It Matters

Through this acquisition, Emerald - whose largest shareholder is the Toronto-based investment manager Onex Corporation ONEX - will gain a notable presence in cannabis industry trade shows. Emerald’s popular events include Outdoor Retailer, ASD Market Week and the International Pizza Expo.

The transaction also reflects the acceptance of the once-stigmatized cannabis plant – and the multibillion-dollar industry that has blossomed around it over the past quarter-century noted MJBiz.

“This really highlights the rapidly growing interest in cannabis from all corners of the business world, the market’s vast potential and the success of not only MJBiz, but also of the entire industry,” MJBiz CEO Chris Walsh said. “We’re seeing these types of deals across cannabis as pioneering companies such as ours level up to more effectively tap and foster the industry’s next wave of growth.”

A Trend In The Making

In September, Crain Communications, one of the world’s largest global business media conglomerates, acquired Green Market Report, a digital media brand that covers financial news connected to the booming cannabis industry.

The following month, Beringer Capital, a private equity firm focused on the media, marketing services, and technology sectors, acquired a majority stake in the stock market site Benzinga in a deal valued at $300 million. Benzinga’s editorial coverage spans traditional financial markets, politics, biotech, cryptocurrencies and, of course, cannabis.

The Emerald Holdings Deal Highlights

The acquisition agreement includes a variable earnout established on financial performance – being an amount equal to the EBITDA growth of MJBiz - calculated as an amount equal to the average MJBiz EBITDA over the past two years minus $13 million – multiplied by 9.3.

This means that depending on earnout, Emerald could end up paying anywhere from $30 million to $50 million in additional money in early 2023, David Doft, Emerald’s chief financial officer told Bloomberg.

The outlet further revealed that the transaction is around half the size of Emerald’s market value of $282 million. According to data obtained by Bloomberg, Emerald’s enterprise is valued at more than $900 million when counting in the debt.

This is reportedly Emerald’s biggest transaction to date and one in the company’s effort to get back on its feet after being negatively affected by the Covid 19 pandemic, which forced most of its events to be canceled. At its IPO in 2017, Emerald raised $303 million, but over the last 12 months, its shares dropped around 22%.  

The company managed to organize and stage 43 events since June, and so far it has not canceled any scheduled for 2022.

Under the deal, the MJBiz management teams and staff will remain under the new ownership.

“MJBiz plans to continue to serve the cannabis business as it has for the past decade, now with a deeper bench,” Walsh said.

Emerald has around 600 employees, while, MJBiz has about 40.

“We chose Emerald because they clearly value the unique aspects of our brand and are committed to serving the industry’s expansion,” said Cassandra Farrington, MJBiz co-founder.

Farrington and her co-founder Anne Holland will act as consultants for a period of time.

Price Action

Emerald Holdings’ shares traded 1.74% higher at $4.09 per share at the time of writing Tuesday morning.

Photo: Courtesy of LexScope on Unsplash