TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF) is buying Michigan-based Gage Growth Corp. (CSE: GAGE) in a deal valued at $545 million. Gage’s portfolio includes the city and state approvals for 19 “Class C” cultivation licenses, three processing licenses, and 15 provisioning centers (dispensaries). Once the deal is closed, the combined business will have operations in 5 states andCanada, including 7 cultivation and processing facilities and 23 operating dispensaries serving both medical and adult-use cannabis markets in the U.S. andCanada.
“The acquisition of Gage expands our footprint to the third largest cannabis market in the U.S.,” saidJason Wild, Executive Chairman of TerrAscend. “Combining our market-leading share in our existing states with Gage’s proven cultivation, retail, and marketing capabilities, creates one of the largest and most dynamic companies in the industry. We look forward to leveraging Gage’s profound connection withMichigan’sconsumers, in addition to its established partnerships with award-winning brands like COOKIES, to provide our patients and customers with best-in-class product offerings and retail experiences.”
Gage shareholders will receive 0.3001 of a common share of TerrAscend for each Gage share held, representing a total consideration of approximately $545 millionbased on the closing price of TerrAscend onAugust 31, 2021. The Exchange Ratio implies a consideration of$2.11(orC$2.66) perGage Share, representing an 18% premium based on the closing prices of both companies’ shares on the Canadian Securities Exchange on August 31, 2021.
“Our shared strategic and corporate values make this combination a strong fit,” saidFabian Monaco, CEO of Gage. “We also recognize the incredible success that TerrAscend has enjoyed in recent years. We could think of no better company to partner with as we execute on our shared strategy of deep vertical integration and scale in our core markets, with a vision of creating the most consumer-centric cannabis company in the world.”
JW Asset Management, LLC, an entity controlled byJason Wild, currently the holder of approximately 39% of TerrAscend Shares will hold approximately 32% of TerrAscend Shares on a partially diluted basis.In addition, JW Asset Management, LLC and its joint actors hold or exercise direction or control over approximately 16.34% of the Gage Shares
Gage has established itself as a leader in theMichigan market, which is the third-largest cannabis market in the U.S. with reported cannabis sales of$171 millionin the month ofJuly 2021, representing an annualized market size of approximately$2.1 billion. The deal will provide access to Gage’s sought-after brand and proprietary library of genetics as well as Gage’s exclusive licensing partnerships in Michiganwith COOKIES, SLANG Worldwide,Blue River, Pure Beauty, andKhalifa Kush.
Gage’s award-winning retail stores generate industry-leading retail metrics, including strong average basket size ($152in the second quarter of 2021 compared toMichiganaverage of$85) and premium pricing for its flower products (40%+ relative to theMichigan market average price). TerrAscend expects to leverage Gage’s portfolio of over 40+ proprietary flower strains in addition to brand and marketing capabilities, at retail locations in other states. Gage comes into the deal with a $32.8 million cash position and minimal debt as of June 30, 2021.
The transaction includes a $30 million termination fee.
TerrAscend Is Buying Gage Cannabis In $545 Million Deal on Green Market Report. -