Cronos Group Inc. CRON CRON announced on Monday that its wholly-owned subsidiary entered into an agreement with Future Farmco Canada Inc., a vertical farming company, for the sale and leaseback of its Ontario, Cananda-based property.
What Happened
Under the deal, Future Farmco agreed to acquire Peace Naturals Campus at 4491 Concession 12 Sunnidale Road for CA$23 million ($16.9 million in cash).
The parties also plan to enter into a lease agreement upon closing for portions of the Peace Naturals Campus, ensuring continued operations.
That deal will include a five-year term and one five-year renewal option that may be exercised by Cronos.
Cronos will also have an option to lease certain additional space during the term of the lease.
Why It Matters
Mike Gorenstein, chairman, president and CEO of the Toronto-based company said the deal is part of Cronos’ efforts to reduce costs.
“More specifically, this sale will aid in improving the gross margin profile of our business, while lowering costs and increasing our agility,” Gorenstein said. “This sale only strengthens our industry-leading balance sheet and allows us to continue to pursue organic growth and future transactions that bolster Cronos’ existing value. We do not expect any interruption to our current operations and plan to carry out existing growth plans within our leased space at the facility.”
What’s Next
Closing of the transaction with Future Farmco is subject to certain conditions outlined in Cronos’ Form 8-K.
Within 180 days of the sale agreement date, Future Farmco must confirm in writing that it is satisfied with various aspects of the property and has secured financing for the transaction. Cronos must receive approval from Health Canada for site perimeter changes.
CRON Price Action
Cronos’ shares traded 0.98% lower at $2.03 per share during the pre-market session on Monday morning.
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