Today, Curaleaf Holdings (CURA)(CURLF) announced that it had signed a definitive agreement to acquire Acres Cannabis for $70 million in a cash and stock transaction. Currently, Acres operates 269,000 square feet of cultivation facilities and a cannabis dispensary in Las Vegas, Nevada.
The acquisition will add a 42,000-square-foot climate-controlled greenhouse cultivation platform and 227,000 square feet of outdoor cultivation for Curaleaf. Acres is also constructing 133,000 square feet of cultivation facility to increase its total cultivation facilities to 400,000 square feet. When the cultivational facility becomes fully operational, it’s forecast to produce 100,000 pounds of dry flowers per year.
Acres’ dispensary in Las Vegas spans 19,000 square feet, which boasts a museum and allows customers to see the processing of its edibles and extracts. The company is constructing its second dispensary at Ely, Nevada, which is expected to open later this year.
In a statement, Curaleaf’s CEO, Joseph Lusardi, stated, “The acquisition of Acres is a major step in expanding our vertical platform in Nevada. Acres operates a flagship dispensary in the heart of Las Vegas, complementing our existing assets in the state extremely well, and importantly, we can control the consistency, quality and production cost of our own cannabis products.”
The transaction, which is subjected to customary closing conditions, is expected to close in 2019. Curaleaf will pay $25 million in cash, and $45 million will be paid with its stocks. Curaleaf will have to make an additional payment, provided Acres meets or exceed specific financial targets.
The announcement appears to have increased investors’ confidence as Curaleaf was trading ~7.6% higher as of 12:07 PM ET. Year-to-date, the company has returned 32.0% as of March 15’s closing price. Meanwhile, peers MedMen Enterprises (MMEN)(MMNFF), iAnthus Capital Holdings (IAN)(ITHUF), and Planet 13 Holdings’ (PLTH)(PLNHF) have returned 1.0%, 31.8%, and 20.8%, respectively. The Horizons Marijuana Life Sciences Index ETF (HMMJ) has returned 59.2%.