Why Curaleaf marijuana stock rose 11% on Monday

What happened

Curafeuille Holdings ( CURVE -7.50% ) Shares rose more than 11% on Monday on news of a new acquisition.

The company has announced that it now holds the exclusive rights to the All Rebels Rockers dispensary license in Arizona, which it acquired from Chicago-based cannabis supplier, privately held Grassroots. Curaleaf did not specify what it paid, nor detail the terms of the agreement.

Image source: Getty Images.

So what

Curaleaf sees this as a harbinger of its outright acquisition of Grassroots, one of the longest deals in the cannabis industry right now.

The two companies first announced their proposed combination nearly a year ago. At the time, the Grassroots deal was valued at $875 million. In light of growing difficulties for marijuana businesses of late, however, the price of the arrangement was reduced last month to around $700 million.

Curaleaf issued a note of confidence in its announcement of the acquisition of the license in Arizona. The purchase “strengthens our presence in the state, which continues to be one of the largest medical cannabis markets in the country,” CEO Joseph Lusardi said in a press release. “This too mark one final steps before the official closing of our acquisition of Grassroots.”

Now what

The All Rebels Rockers deal is a small potato compared to the rest of Grassroots, which is the true price. Core shareholders will vote on the acquisition of Curaleaf on Thursday. Even if they are very likely to approve it, investors should nevertheless expect a “phew, it’s finally over” for the title afterwards.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

Comments are closed.