A trend that will stand out in the cannabis sector in 2021 is the shift towards mergers and acquisitions on both sides of the Canada-US border.
The increase in mergers and acquisitions continues to be the story in the early days of September and anticipation of US marijuana legalization continues to tilt on the optimistic side. One of the most recent deals fueling the merger trend is the announcement last week that US multi-state cannabis company TerrAscend Corp (OTC:) (CSE:) will buy Michigan-based marijuana grower Gage Growth (CSE:) for US $545 million.
The purchase of Gage Growth gives TerrAscend access to Michagan, the third largest pot market in the US. TerrAscend already operates in California, New Jersey and Pennsylvania, as well as Canada.
The deal includes Gage Growth's 10 cannabis dispensaries, as well as another 10 that were set to open in Michigan.
Under the terms of the deal, Gage Growth shareholders will receive 0.3001 TerrAscend common stock, or approximately 19.8% of the combined company.
The new combined company will five states and Canada, and oversees a total of seven growing and processing facilities and 23 retail outlets catering to both medicinal and recreational cannabis customers on both sides of the border.
Gage CEO Fabian Monaco said in a joint statement issued by the two companies last week:
"Our shared strategic and corporate values ??make this combination a strong match. We also recognize the incredible success that TerrAscend has enjoyed over the years. We couldn't think of a better company to work with in executing our shared strategy of vertical integration and scale in our core markets, with a vision to create the most consumer-centric cannabis company in the world.”
According to the joint statement, approximately 58.5% of Gage's shareholders support the deal.
The deal is expected to close in the first half of next year. Gage Growth's healthy cash position and TerrAscend's strong balance sheet, which will help the new joint venture execute on its growth plans. closing price of the previous day. The stock is up just over 44% in the past 12 months.
Cannabis sector to merge in 2021
So how many cannabis companies are participating in mergers and acquisitions?
According to Viridian Capital Markets, a financial and strategic advisory firm focused on the cannabis sector, there are 212 deals closed in the marijuana sector in the first eight months of 2021, compared to 54 in the same period in 2020.
Public listed companies were the buyers in 84% of deals, down from 92% in 2020 .
Of the 212 deals so far in 2021, 147 were involved in a total of US$5.5 billion.
