Shares of Curaleaf Holdings Inc (OTCMKTS: CURLF) are surging following the confirmation that the Company is poised to complete a major acquisition in the burgeoning cannabis sector. The company has inked a deal to acquire Cura Partners, owners of the Select brand, in an all-stock deal valued at $949 million.
Curaleaf Price Analysis
The stock shot up 15% on the confirmation the deal, set to strengthen Curleaf cannabis manufacturing, processing, distribution, and retail operations. The merger should result in immediate geographic diversification with a footprint in both East Coast and West Coast cannabis marketplaces.
Curaleaf has been on an impressive run since the turn of the year on underlying fundamentals turning bullish. The stock is already up by more than 90% and showing no signs of slowing down. Pullbacks have so far acted as solid support level from where the stock has bounced back and continued to post higher highs.
A bounce back from the $9.70 level could see the stock registering new higher highs for the year as the upward momentum continues to gather pace. Standing in the way of further upside action is the $11.20 resistance level.
A rally followed by a close above the $11.20 mark should reaffirm the steep uptrend as the stock continues to take the market by storm.
What Does Curaleaf Do?
Curaleaf is an integrated medical and wellness cannabis operator. The Company cultivates, processes and markets cannabis products in various operating markets. The company also offers non-cannabis services to licensed cannabis operators.
Cura Partners $949 Million Acquisition
Curleaf agreeing to buy Cura Partners, the owners of Select brands, for $949 million is a major development that once again underscores the Company’s push for inorganic growth. With the acquisition, the company is poised to gain access to Select Cannabis products including all intellectual property.
The acquisition is also poised to expand the company’s portfolio into Oregon where Select is well known as a cannabis wholesale brand. The deal should also allow Curaleaf to focus on growing its Medical marijuana business on the East Coast while integrating Cura’s medical marijuana business on the East Coast.
Select boasts of a robust retail footprint sold in more than 900 retailers making it the largest cannabis brand in the Western states.
According to Cura Chief Executive Officer Joseph Lusardi, a merger with Select brand is a perfect fit in the race to create the most accessible cannabis brand in the U.S. Plans are already underway to create operational synergies from the merger of Curleaf and Select brand.
“With our industry-leading capacity, expansive retail distribution network and Select’s impressive sales and marketing capabilities, we intend to meaningfully accelerate our topline growth trajectory with the addition of the Select Oil product range,” said Mr. Lusardi.
Growing Retail Footprint
The acquisition comes at a time when Curaleaf has established a robust retail footprint in the US made up of 44-cannabis dispensary. The company also boasts of 12 cultivation sites as well as 11 processing sites that continue to churn cannabis products for meeting growing demand across the diversified retail channel.
Curaleaf is fresh from opening its 24th Florida Dispensary as the company continues to push for market share in the State’s burgeoning cannabis landscape. With the opening, the company now boasts of the largest cannabis dispensary footprint in the US.
“In launching our second full-service medical cannabis dispensary in the Jacksonville area, our team at Curaleaf continues to deliver on its commitment to improve the quality of Northeast Florida patients’ lives by providing access to top-quality cannabis products and educational resources,” said Mr. Lusardi.
The acquisition of Cura and its Select Brand could not have come at a better time for Curaleaf. The company is entangled in a fierce battle for market share as demand for cannabis products continues to grow following the legalization drive in North America.
The fact that the company is poised to gain access to a robust network made up of more than 900 retailers should see the company ramp up sales efforts in pursuit of cannabis revenues. Cura acquisition should allow Curaleaf to expand its footprint and realize cost synergies ideal for boosting the Bottom Line.
The fact that the company has also established a robust cannabis dispensary network also ensures it continues to generate significant value as demand for medical cannabis continues to grow.
The stock has been on an impressive run since the start of the year, a trend set to continue as underlying fundamentals continue to inch higher.
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Disclosure: We have no position in CURLF and have not been compensated for this article.