Heritage Cannabis Holdings Corp (CSE:CANN) (OTCQX:HERTF) (FRA:2UE) said it has signed a non-binding letter of intent to purchase California-based Bloom Brands, a collection of recreational cannabis brands.
Under the terms of the agreement, Bloom will receive around US$15 million in Heritage shares in two tranches, one of US $7.5 million in shares at a deemed value of C$0.14 each followed by a second tranche of shares six months after closing at a deemed value of either C$0.16 per share, or a 15% discount to the 15-day volume-weighted average price, whichever is greater.
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The deal also includes potential milestone payments of up to an additional US$17 million of Heritage shares, which will be contingent on Bloom achieving certain financial targets over a 12-month period.
Heritage said the acquisition will provide it with an immediate market footprint in California, New Mexico, Oklahoma, Washington, Nevada, and Arizona and also immediately creates a revenue-generating US platform solidifying its cannabis strategy to establish its distribution platform in nine states.
The firm said the transaction is expected to close by the end of July, although there can be no assurance the deal will be completed on the arranged terms.
“This transaction combines Heritage's leading Canadian recreational and medical brand platform with a well established, widely distributed cannabis brand in the US, which are retailed in over 500 stores across California, Nevada, New Mexico, Arizona, Washington, and Oklahoma,” Heritage president David Schwede said in a statement.
“Heritage has been advancing its US investment strategy while focusing on strong financial discipline, high growth opportunities, and solid execution of its growth strategy. Bloom brings with it a strong team with a wealth of US experience, and as a combined entity, Heritage will be positioned as one the most widely distributed house of cannabis brands in North America,” he added.
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