Marijuana multistate operator Cresco Labs entered a definitive agreement to acquire Bluma Wellness for $213 million in an all-stock transaction in a move to expand into Florida’s fast-growing medical cannabis market.
Bluma, under its operating subsidiary “One Plant Florida,” has seven dispensaries in the southern state with eight additional locations planned.
One Plant ranks 11th in Florida in the number of dispensaries but is in the top five in per-store sales of smokable flower, according to state data. Bluma also has 54,000 square feet of cultivation space.
The deal reflects how merger and acquisition activity has been heating up in the marijuana space and how investor sentiment is brightening since Democrats won control of the U.S. Senate.
“Our strategy at Cresco Labs is to build the most strategic geographic footprint possible and achieve material market positions in each of our states,” CEO Charlie Bachtell said in a news release.
“With Florida, we will have a meaningful presence in all seven of the 10 most populated states in the country with cannabis programs – an incredibly strategic and valuable footprint by any definition.”
Bachtell said Chicago-based Cresco identified Bluma because of its “best-in-class cultivation facility,” effective delivery operation and strong management team.
Bluma said its shareholders will receive 0.0859 of a subordinate voting share of Cresco Labs for each Bluma share held.
The Florida company said it anticipates the transaction being completed by the start of the second quarter, pending shareholder, regulatory and other approvals.
New York-based Cowen, which acted as a financial adviser to Cresco in the deal, said in a research note Thursday that Florida was on the “short list” of priority markets for Cresco.
The acquisition, Cowen analysts wrote, represents a 29% price premium over Bluma’s share-price close on Wednesday and “appears to reflect the market’s perceived benefit of the Democratic party taking a slim majority in the U.S. Senate.”
Marijuana Business Factbook projects that Florida’s MMJ sales will reach $1 billion-$1.225 billion in 2021, which represents roughly a doubling over two years.
Bluma stock, which trades on the Canadian Securities Exchange under the ticker symbol BWEL.U and on the U.S. over-the-counter markets as BMWLF, was up more than 15% in morning trading.
Cresco Labs, which trades on the CSE as CL and the OTC markets as CRLBF, was up about 7% in early trading.