TPCO Holding Corp, better known as Parent Co, and privately held Gold Flora announced an all-stock merger on Wednesday that would help strengthen their presence in California’s cannabis market.
Current TPCO shareholders will hold about 49% in the new company, while Gold Flora shareholders will own the remaining 51%.
“This vertical integration will fuel development of more consumer brands and broader consumer reach,” Parent Co Chief Executive Officer Troy Datcher said.
The deal is expected to close before the end of the third quarter. Datcher will become chairman of the merged entity’s board, and Gold Flora top boss Laurie Holcomb will be named CEO of the combined company.
After a surge in cannabis sales during the early stages of the COVID-19 pandemic, the industry in the United States is showing signs of slowing down in the face of regulatory and economic challenges.
“We have scale, which is really a great attribute to have during challenging economic times … so our two companies coming together gives us a footprint that would be envied by most people in the state of California,” Datcher told Reuters.
The combined company would have pro forma revenue of $116.4 million for the nine months ended Sept. 30, 2022, with gross margins of 33%. It is expected to achieve between $20 million and $25 million cost savings annualized.
The New Parent, which will operate as Gold Flora Corp, is anticipated to remain a reporting issuer in Canada on the Neo Exchange and on the OTC Markets.
Source: Reuters.com