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Curaleaf Holdings said Tuesday it signed a $286 million definitive agreement to acquire London-based medical marijuana company Emmac Life Sciences, giving the Massachusetts-based multistate operator a major foothold in the European cannabis market and a leg up on rival businesses.
The terms of the deal call for Curaleaf to pay $286 million up front, with 85% in Curaleaf stock and 15% in cash.
The transaction includes another $57 million dependent on achieving certain performance targets, meaning the deal ultimately could total up to $343 million.
Emmac, already a vertically integrated cannabis company, has an existing footprint in eight European countries, including the United Kingdom, Germany, Italy, Portugal and Spain.
The company exports cannabis grown in Portugal to the Israeli marijuana market, for instance, and it plans to ramp up production capacity significantly this year, according to a press release.
Curaleaf currently operates in 23 states with 101 dispensaries, 23 cultivation sites and more than 30 processing sites. The company employs more than 3,800.
“By doing this transaction, Curaleaf is indisputably the largest operator on a revenue and a footprint basis around the globe,” Curaleaf Executive Chair Boris Jordan told Bloomberg.
Emmac CEO Antonio Costanzo said in news release the deal is “not only a significant milestone for Emmac, but for the European cannabis market as a whole.”
Executives at both companies expect they’ll benefit from continuing liberalization of marijuana laws on both sides of the Atlantic.
“The consumer and political liberalization trends around cannabis that are sweeping the U.S. are also increasingly taking hold in Europe,” Jordan said in the release.
“The European cannabis market has the potential to exceed the U.S. cannabis market over the long-term and will help fuel our growth for years.”
According to the Financial Times, Curaleaf was making 90% of its revenues from medical marijuana at the start of 2020, but today that split has shifted, with 60% of the company’s revenues coming from adult-use cannabis.
Similar moves to legalize recreational cannabis are expected across Europe in coming years, as various countries roll back marijuana prohibition and become more accepting of cannabis in general.
Costanzo said he believes most of Europe is about three to four years behind the U.S. on that front.
“We are going to see recreational use opening up in the next few years (in Europe), but in the short term, medical will drive growth,” Costanzo told the Financial Times.
The deal is expected to close in the second quarter this year.
Curaleaf trades on the Canadian Securities Exchange under the ticker symbol CURA and on the U.S. over-the-counter markets as CURLF.
John Schroyer can be reached at [email protected].
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