Curaleaf stock is down 5% today after Curaleaf Holdings (CSE:CURA) (OTCQX:CURLF) announced that its all-stock acquisition of extraction firm Cura Partners Inc is being downsized from its original valuation of $1 billion USD amidst changing market conditions.
Amended Acquisition Terms
Under the amended agreement, Cura shareholders are guaranteed 55 million shares in Curaleaf Holdings, which will account for about $284 million USD based on yesterday's closing price of $5.17. Cura Partners, which is the parent company of CBD brand Select, reported $117.5 million USD in sales in 2018 and has been one of the fastest-growing private companies in recent years, according to the Business Journal. Curaleaf stock has dropped to a year low following the announcement.
The Portland-based extraction company has the opportunity to earn back some of the lost value of the deal based on meeting certain performance milestones. “The amendment reflects current market conditions and closely aligns the interests of all stakeholders to the ongoing performance of Select's business,” Curaleaf said in a statement this morning.
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Curaleaf Stock Down 50% Since May
Curaleaf stock has dropped over 50% since a May peak of $11.23 as the cannabis industry battles various headwinds. The company has been caught up in a class-action suit relating to false claims made about its range of CBD products on its website. The suit alleges that Curaleaf Holdings made “materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects.” Specifically, Curaleaf advertised its CBD product as drugs and dietary supplements, which is against the law.
However, Curaleaf stock received a major boost last month with the passage of the SAFE Banking Act. In what is considered a landmark step forward for the cannabis industry in the United States, the House of Representatives voted overwhelmingly in favor of the Secure And Fair Enforcement (SAFE) Banking Act, which protects banks when working with cannabis companies like Curaleaf and paves the way for substantial growth in the industry.
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