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Curaleaf To Acquire Grassroots For About $875 Mln

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Cannabis company Curaleaf Holdings Inc. (CURLF) has agreed to acquire privately-held GR Companies, Inc. or Grassroots, for about $875 million in cash and stock.

The acquisition will make Wakefield, Massachusetts-based Curaleaf the world's largest cannabis company by revenue and the largest in the U.S. by other key operating metrics.

Following Curaleaf's acquisition of Grassroots and its proposed acquisition of Cura Partners Inc., the combined company will have 131 dispensary licenses, 68 operational locations, 20 cultivation sites and 26 processing facilities, Curaleaf said in a statement.

In May, Curaleaf agreed to acquire Cura Partners, owner of the Select Brand, for $948.8 million in stock. The acquisition comprises Select's manufacturing, processing, distribution, marketing and retailing operations as well as its all adult-use cannabis products marketed under the Select brand name, including all intellectual property.

The Grassroots acquisition will expand Curaleaf's presence to 19 states from 12 states currently, the company said in a statement. This includes coveted markets such as Illinois and Pennsylvania.

The transaction is composed of $75 million in cash, 102.8 million subordinate voting shares of Curaleaf, and $40 million in Curaleaf shares priced at the ten-day volume-weighted average price prior to closing of the transaction.

The proposed transaction is expected to close in early 2020, following approval by Grassroots' stockholders. It has been unanimously approved by the boards of directors at both companies.

At closing, Grassroots security holders will have a nearly 16 percent pro-forma ownership of Curaleaf on a fully-diluted basis after giving effect for the Select acquisition.

Curaleaf noted that the Grassroots acquisition will add new markets in Arkansas, Michigan, North Dakota, Oklahoma, and Vermont, building on the company's existing businesses in Connecticut, Maryland, Nevada and Ohio.

Chicago-based Grassroots has a portfolio of 61 dispensary licenses, with 20 operating currently, in addition to 17 cultivation and processing licenses.

Grassroots has a presence in large markets in which Curaleaf presently does not operate. This includes Illinois, which in June became the eleventh state to legalize adult-use cannabis, and Pennsylvania, the fifth most populous state in the U.S.

Upon completion of the proposed transaction, Curaleaf will be the largest medical and adult-use cannabis company with access to a total population of about 177 million people.

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