U.S. cannabis retailer Curaleaf set to raise about $400 mln-sources (updated)

Medmen Enterprises

24/10/2018 20:31

(Adds details of the deal throughout)
    By John Tilak and Nichola Saminather
    TORONTO, Oct 24 (Reuters) - U.S. cannabis retailer Curaleaf
Holdings Inc is raising about $400 million, almost three times
its original target, in Toronto, in a deal that would value the
company at close to $4 billion, people familiar with the
situation told Reuters. 
    The move by the Wakefield, Massachusetts-based company,
which also owns cannabis cultivation operations, comes ahead of
going public on Monday in what will be one of Canada's largest
reverse takeovers.
    Curaleaf's equity increase will come through a private
placement that converts to a public company.
    The cannabis industry has seen a flurry of capital raisings
and mergers ahead of last week's legalization of recreational
marijuana in Canada.  urn:newsml:reuters.com:*:nL2N1WX0A5
    The offer is set to be priced at C$11.45 per subscription
receipt, near the top end of the previously disclosed range of
C$8.56-C$11.47 per receipt, according to one of the people. A
subscription receipt can be exchanged for the underlying
security upon the deal's closing.
    Curaleaf's fundraising is among the biggest equity offerings
in the sector and has attracted more than 100 institutional
investors, according to one of the sources.
    The offer is expected to be priced as early as Wednesday,
the people said. 
    An external spokesman for Curaleaf declined to comment. The
sources declined to be named as the matter is not public. 
    Reverse takeovers (RTOs) allow companies to go public by
rolling into an listed shell corporation and typically have a
faster timeline than a traditional initial public offering.
    RTOs have emerged as preferred route for most U.S. cannabis
companies seeking to go public.
    Curaleaf's listing will be the biggest-ever RTO on the
Canadian Securities Exchange (CSE), the exchange said.
    Curaleaf, which owned 28 dispensaries in nine U.S. states as
of Sept. 7, is turning to Canada as a federal prohibition of
cannabis in the U.S. makes raising capital there a challenge. It
expects to increase the number of dispensaries in its network to
41 by the end of the year.
    Currently, 49 companies with U.S. cannabis interests are
listed on the CSE, out of a total 106 marijuana issuers,
according to data from the exchange. U.S. cannabis listings on
the CSE by RTO this year include retail chain MedMen Enterprises
 MMEN.CD  and Green Thumb Industries  GTII.CD .
    Despite being federally illegal, the U.S. is the world’s
biggest cannabis market, with California alone expected to have
sales of $5.1 billion this year, according to Arcview Market
Research, and companies are eager to get a slice of that pie.
    Investment banks GMP Securities and Canaccord Genuity are
leading the offering.    

 (Reporting John Tilak and Nichola Saminather
Editing by Denny Thomas, David Gregorio and Diane Craft)
 ((Nichola.Saminather@thomsonreuters.com; +1-416-687-7604;))