M&A heats up in US marketplace

Cresco Labs (CSE:CL,OTCQX:CRLBF) is set to buy fellow multi-state producer (MSO) Columbia Care (NEO:CCHW,CSE:CCHW,OTCQX:CCHWF) in a deal worth US$2 billion.

The gigantic acquisition is another landmark deal in an industry where experts have been calling for more M&A.

Based on early projections, the resultant company expects annual revenue of over US$100 million by 2023.

“The combination of Cresco Labs and Columbia Care accelerates our journey to become the leader in cannabis in a way no other potential transaction could,” Charles Bachtell, CEO of Cresco Labs, said.

Both companies are reportedly in full agreement about the proposed transaction, which will result in a 16 percent premium for Columbia Care shareholders.

Nicholas Vita, CEO of Columbia Care, said his ultimate goal has been to deliver “the best outcome for our stakeholders.” He explained, “With Columbia Care’s strategic national footprint in the most attractive markets and Cresco Labs’ success in execution and incredibly popular brands, we will together create the most important — and the most investable — company in cannabis."

Cresco told investors it expects the deal to be completed by the Q4 of this year.

Both companies also shared their most recent quarterly results this past week.

Columbia Care issued revenue guidance of between US$625 million and US$675 million in 2022. Meanwhile, Cresco Labs reported an increase in revenue of 73 percent year-over-year, resulting in US$822 million.

As for the most recent quarter, Columbia Care reported an uptick of 5 percent in revenue to reach US$139 million, while Cresco Labs saw its revenue jump 34 percent for a final result of US$218 million.

Cresco Labs and Columbia Care posted net losses of US$296.8 million and US$146.8 million, respectively.

Aurora Cannabis makes new acquisition

For its part, Canadian cannabis producer Aurora Cannabis (NASDAQ:ACB,TSX:ACB) plans to spend C$38 million to buy TerraFarma, the parent company of Thrive Cannabis.

Payment will be delivered in a split of cash and Aurora common shares. In addition, there are two earn-out amounts based on “achieving certain revenue targets” in the next two years.

“We see a unique opportunity to leverage (Thrive Cannabis’) expertise to deliver near and long-term benefits for both our recreational and medical markets," Aurora CEO Miguel Martin said.

According to the cannabis executive, the acquisition fits into Aurora’s path to profitability.

“Thrive's achievement of positive standalone EBITDA, combined with their exceptional operational and brand capabilities, truly set them apart, and we look forward to leveraging their expertise as we embark together on Aurora's path to profitability," Martin commented in a press release.

Shares of Aurora have been up since the deal went official on Tuesday (March 22). The company had jumped by double digits before the end of the trading week, and as of 1:31 p.m. EST on Friday (March 25) was up 4.46 percent for a share price of US$4.22.

Cannabis company news

• Charlotte's Web Holdings (TSX:CWEB,OTCQX:CWBHF)issued its Q4 and year-end 2021 financial results. The company posted a net loss of US$137.7 million for 2021 despite an increase in revenue to US$96.1 million. "We have substantially completed our multi-year investment in our production capacity to effectively service a sophisticated mass retail channel when federal regulations are set for the CBD wellness category in the US,” said CEO Jacques Tortoroli.

• Eve & Co (TSXV:EVE,OTCQX:EEVVF)informed shareholders it has applied for creditor protection with the Ontario Superior Court of Justice. The company is set to make its application on Friday.

• Nova Cannabis (TSX:NOVC)released its financial results for 2021's Q4 and year-end periods. CEO Darren Karasiuk highlighted the fact the company now oversees 78 cannabis stores in Canada. The firm is waiting for Sundial Growers (NASDAQ:SNDL) to complete its acquisition of Alcanna (TSX:CLIQ,OTC Pink:LQSIF), Nova's majority shareholder.

• Cronos Group (NASDAQ:CRON,TSX:CRON)confirmed the return of Mike Gorenstein as its chairman, president and CEO. “We positioned Cronos to have the best tools to succeed in this market with our evolving asset-light supply chain, an organically growing brand in Canada, differentiated IP with a focus on rare cannabinoids, and one of the strongest balance sheets in the industry,” Gorenstein said.