The Canada-listed cannabis stocks we’ve weeded out today recently made large acquisitions that were paid for in stock
SmallCapPower | November 7, 2018: Today we have identified three Canada-listed cannabis stocks that recently made acquisitions that were funded by equity issuance and that consequently led to existing shareholder dilution. Although existing shareholders own a smaller percentage of the company after the dilution, in the long run they may actually benefit if the funds are deployed efficiently. If the funds are used to conduct M&A activity, for example, the acquired company may provide an earnings boost and create value for the parent company, in which case the issuance of equity was in the best interest of shareholders. All metrics reflect closing prices as at November 5, 2018.
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iAnthus Capital Holdings Inc. (CSE:IAN) – $7.25
Cannabis
iAnthus Capital Holdings is a cannabis-focused company operating ~275,000 sq. ft. of cultivation and 39 dispensaries across six U.S. states. The Company’s primary asset, GrowHealthy, operates a 200,000 sq. ft. facility and 30 dispensaries in Florida, out of 13 state cultivation licenses and 35 open dispensaries. On August 15, 2018, the Company announced a US$8.1M investment to expand the Company’s Lake Wales facility. The expansion will increase capacity to 11,689 sq. ft. and includes a 500 sq. ft. mock dispensary used for staff training. On October 18, 2018, the Company announced its acquisition of MPX Bioceutical in a deal worth $835 million.
- Market Cap: $534.6 Million
- YTD Returns: +148.3%
- Value of Shares Issued: $835 Million
MedMen Enterprises Inc (CSE:MMEN) – $7.59
Cannabis
MedMen Enterprises is a vertically-integrated cannabis company focused in the U.S. market. The Company has 18 facilities that manufacture and distribute cannabis products in California, Nevada and New York. On June 6, the Company completed an acquisition of Treadwell Simpson Partnership and its affiliate. Through this transaction, MedMen gained access to Treadwell Nursery’s cultivation facility in Florida and has the license to open 25 additional medical dispensaries in Florida. On October 19, MedMen announced its intent to acquire PharmaCann for US$682 million, which led to the most recent upswing in the stock. Once closed, the acquisition effectively positions MedMen in 12 states, including New York, Illinois, and Pennsylvania.
- Market Cap: $3.3 Billion
- YTD Returns: +53.3%
- Value of Shares Issued: US$682 Million
Golden Leaf Holdings Ltd. (CSE:GLH) – $0.23
Cannabis
Golden Leaf Holdings produces and distributes cannabis oil and flower products, with operations in Canada and several U.S. states including Oregon, Nevada, and California. The Company recently acquired California and Nevada assets from Tahoe, in a transaction valued at $52M. The acquisition will further solidify Golden Leaf’s presence in California and is expected to be immediately accretive. On September 24, 2018, Golden Leaf Holdings announced that its subsidiary, Medical Marijuana Group, had received its sales license from Health Canada. The Company forecasts that the license could contribute an incremental US$900,000 in Q3 revenues, as on hand inventory can immediately be shipped out. On November 2, 2018, a merger with Terra Tech Corp (OTCPK:TRTC) was announced, in which Terra Tech would issue shares to consummate the deal. Golden Leaf shareholders will receive 0.1203 shares of Terra Tech for every share of Golden Leaf, in a transaction valued at approximately $160 million.
- Market Cap: $131.3 Million
- YTD Returns: -46.5%
- Value of Shares Issued: $160 Million by Terra Tech
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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