This Cannabis Co Adds Organic Food Supplier Bridgewell To Growing Acquisition Portfolio

Vireo Growth Inc. (CSE: VREO) (OTCQX: VREOF) continues its acquisition spree. The company revealed on Monday its plans to acquire Bridgewell Agribusiness LLC, a supplier of organic and non-GMO food and agricultural products.

What Happened

Under the proposed deal, Bridgewell is valued at a base purchase price of $40 million, subject to adjustments and roughly $30 million in assumed debt. After adjustments, the estimated closing purchase price is expected to be around US$10.26 million, according to the press release.

Vireo intends to fund the acquisition via an unsecured subordinated convertible note issued to the seller instead of cash. The convertible note is expected to convert after two years into roughly 16.55 million Vireo subordinate voting shares at an estimated price of $0.62 per share.

Why It Matters

The acquisition would expand Vireo beyond cannabis into food and agricultural supply markets.

What’s Next

Vireo said the transaction could close as early as five business days after the announcement.

Completion remains subject to Canadian Securities Exchange approval and other customary closing conditions.

The Background

Vireo has been executing its multi-state consolidation strategy for months.

The company wrapped up April by entering a definitive agreement to acquire FLUENT Corp. (CNSX:FNT.U) for $18.7 million. The deal will expand the company’s presence in the Florida medical cannabis market, as the combined company will operate approximately 74 stores and 144,000 square feet of cultivation space.

The FLUENT deal came about a month after Vireo closed its acquisition of Eaze Inc., a vertically integrated cannabis retailer and delivery technology platform with operations in California, Florida, and Colorado.

Separately, Vireo acquired Scotts Miracle-Gro Company’s (NYSE: SMG) cannabis business, Hawthorne, in April. That deal strengthened Vireo’s balance sheet with approximately US$110 million of cash and net working capital.

In March, the acquisition of certain assets of U.S. multi-state cannabis operator Medicine Man Technologies, Inc., doing business as Schwazze, bolstered Vireo’s footprint with 24 dispensaries in Colorado, 21 dispensaries in New Mexico, and 1 manufacturing facility in each of Colorado and New Mexico.

That said, Vireo recently reported first-quarter GAAP revenue of $106.2 million, up by 333.5% year-over-year, driven by recently closed M&A transactions.

“We are focused on integration and optimization across the platform while remaining opportunistic with respect to further acquisition-related growth opportunities,” John Mazarakis, the company’s CEO, said in a statement.

VREOF Price Action

Vireo’s shares traded 3.34% lower at $0.405 per share after the market closed on Friday.