Golden Leaf Buys US Producer Tahoe for C$52.4 Million

On Monday (August 13) a cannabis operator in Canada with operations in the US, expanded its reach in Nevada and California thanks to its acquisition of a local producer.

Golden Leaf Holdings (CSE:GLH,OTCQB:GLDFF) is set to buy the assets of Tahoe Hydroponics Company and 11T, collectively known as Tahoe, for roughly C$52.4 million in which Tahoe shareholders will obtain Golden Leaf shares.

Golden Leaf will issue C$11.1 million in cash and approximately 202 million shares of the company representing a value of C$41.3 million to Tahoe shareholders.

“Combined with high revenue growth and cash flow generation, [Tahoe] align perfectly with our strategic vision of being a premier vertically integrated seed-to-sale cannabis provider,” William Simpson, CEO of Golden Leaf said.

The executive for the cannabis operator said the new acquisition for Golden Leaf counts with brand recognition in the Nevada market.

Ray Schiavone, CEO of Tahoe Golden Leaf brings “established expertise in extraction, product development and retail operations” as part of the acquisition. Schiavone added seeing and understanding the value proposition from Golden Leaf makes it an “incredible opportunity” for Tahoe.

Once the acquisition is completed Tahoe shareholders will own a 25.8 percent stake in the new combined venture.

According to Golden Leaf the two co-founders of Tahoe, Schiavone and Mark Bruno, will be kept in the new company for at least 18 months as part of the agreement.

New assets from acquisition for public operator

As part of the purchase, Golden Leaf will obtain control of a 21,600 square feet facility in Carson City, Nevada and a 21,600 square feet facility currently under development in Sacramento, California. The facility in California is projected to begin production in the first quarter of 2019.

Tahoe’s Nevada facility produces 4,000 pounds of cannabis product per year and, thanks to its distribution platform in the state, Golden Leaf perceives a 56 market entry across the state through adult-use dispensaries.

Investor takeaway

Following an initial excitement for the acquisition the markets soured on Golden Leaf, with the company’s share price showing a 2.17 percent dip as of 2:00 p.m. EST on Monday.

Golden Leaf’s shares hold a “Buy” rating from Canaccord Genuity analyst Matt Bottomley. The analyst slapped the company with a one year price target of C$0.50. As of this writing shares for Golden Leaf were valued at C$0.22.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.