Adam Jackson
Glass House Brands (OTCQX: GLASF) is a step closer to shoring up its M&A grabs.
The company closed on its acquisition of the Natural Healing Center (NHC) dispensary located in Morro Bay, California, after being granted local regulatory approvals. Consolidation of the financial results of the Morro Bay store into Glass House’s financials will be effective immediately, so Glass House will end the third quarter with seven retail dispensaries.
Glass House said in May that it had reached definitive agreements to acquire 100% of the equity interests in three Natural Healing Center retail assets in California: two operating dispensaries in Lemoore and Morro Bay, as well as one retail dispensary in Turlock scheduled to open in the fourth quarter.
The company closed on the NHC Grover Beach and Lemoore dispensaries last week.
Glass House’s CEO previously said this year that it would embark on an aggressive acquisition spree this year.
“As we stated when announcing the execution of definitive agreements for the NHC transaction, this acquisition will advance us further in our goal of becoming one of the largest retailers in the state of California, adds further support to our recently acquired PLUS edibles business and provides incremental outlets for CPG sales as the SoCal farm continues to expand its output,” said Glass House CEO Kyle Kazan.
“Given NHC’s positioning in limited license markets and its strong consumer following, we are excited to be adding these four dispensaries to our retail portfolio. The NHC transaction is expected to be immediately accretive to Glass House on both a revenue and EBITDA.”
Glass House will enter into a 5-year lease at each location with three renewal options for a total term of up to 20 years.
Closing of the Turlock store, the remaining NHC dispensary transaction, depends on local regulators approving the transfer of ownership and is further subject to certain customary closing conditions such a stamp of approval from the NEO Exchange.
Glass House said it expects to issue approximately 2 million new equity shares in conjunction with the closing of the Morro Bay acquisition. These shares will all be issued at $4.41 per equity share, the 25-day volume-weighted average price for Glass House Brands equity shares trading on the NEO Exchange as of May 12, the date upon which definitive agreements were signed.
Up to an additional $500,000 of equity shares may be payable to the NHC sellers subject to certain contractual lock-ups and escrow holdbacks. These generally are paid out over two years if all equity shares are released after the lock-up and holdback periods expire. Sellers are also subject to certain contractual early-release triggers, the company said.
