Canadian cannabis company TerrAscend said on Monday it is terminating what was initially a $118 million purchase of Nevada-based Gravitas Nevada, becoming the latest proposed acquisition to fall victim to falling stock prices.
The acquisition, which included The Apothecarium retail stores in Nevada and California, called for Toronto-based TerrAscend to pay $33.5 million in cash and 625 proportionate voting shares in the equity of TerrAscend equivalent to 625,000 common shares of the company.
The original deal called for TerrAscend to invest $73.7 million cash and 7.325 million shares.
But because TerrAscend’s stock price has dropped by about 50% since the deal was first announced, the current deal would have been valued at about $35.3 million, according to calculations by Craig Behnke, an equity analyst for Marijuana Business Daily’s Investor Intelligence.
Soon after the deal was originally announced on Feb. 11, 2019, Gravitas CEO and co-founder Ryan Hudson described the pending purchase as a “good fit.”
With the deal’s collapse, TerrAscend paid $3 million to Gravitas as required under the purchase agreement.
TerrAscend is no longer liable for the remaining $30.5 million and 625,000 company shares.
This deal is the latest in a number of cannabis-industry acquisitions that have collapsed in recent months as companies seek to conserve cash amid dropping stock prices.
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Written by John Rebchook.
View the original article at here.
Marijuana Business Daily