Harvest Health & Recreation Signs Definitive Agreement to Acquire Verano Holdings to Become One of the Most Diversified U.S. Cannabis Operators
Harvest Health & Recreation, Inc. (CSE: HARV, OTCQX: HRVSF) ("Harvest"), a vertically integrated and highly diversified cannabis company with a strong financial and growth profile, would become the largest multi-state operator (MSO) in the U.S. following closing of a definitive agreement signed on April 22, 2019 (the "Business Combination Agreement") to acquire (the "Transaction") Verano Holdings, LLC ("Verano"), as previously announced by press release dated March 11, 2019. Verano is one of the largest privately held multi-state, vertically integrated licensed operators of cannabis facilities with an extensive portfolio of premium branded products.
Pursuant to the terms of the Business Combination Agreement, securityholders of Harvest and Verano will become securityholders in the combined company which will carry on the business of Harvest and Verano (the "Resulting Issuer"). The Transaction will be carried out by way of a plan of arrangement under the Business Corporations Act (British Columbia) whereby, among other things: (i) Harvest shareholders will exchange their shares in Harvest for equivalent securities in the Resulting Issuer on a 1:1 basis, and (ii) Verano securityholders will be issued a combination of subordinate voting shares and multiple voting shares in the capital of the Resulting Issuer in connection with the indirect exchange of their securities in Verano. The all-stock Transaction has an implied total acquisition cost of approximately USD $850 million, based on a Harvest share price of CND $8.79. In addition, the Transaction will include completion of various Verano pipeline acquisitions, with a combined value of approximately USD $36 million, additional pipeline acquisitions that are in negotiations and may include certain entities that are ancillary to Harvest’s business, payable in shares of the Resulting Issuer.
In connection with the Transaction, an application will be made to list the Resulting Issuer's subordinate voting shares for trading on the Canadian Securities Exchange (the "CSE").
The Transaction will require, among other approvals, the approval of at least 66 2/3% of the votes cast by each class of Harvest shareholders at a special meeting expected to take place in June 2019 (the "Harvest Meeting"). The board of directors of Harvest has unanimously approved the Transaction and will recommend that Harvest shareholders vote in favour of the Transaction at the Harvest Meeting.