Harvest Health surges 19% after Trulieve acquires the cannabis company for $2.1 billion in stock

• Trulieve is acquiring Harvest Health in a $2.1 billion all-stock deal.
• The purchase price in the deal implies Trulieve paid a 34% premium from Friday's closing price for Harvest.
• The combined company is expected to turn in $1.2 billion in revenue in 2021.

Harvest Health stock surged as much as 19% on Monday after Trulieve acquired its cannabis industry rival for $2.1 billion in an all-stock deal.

Under the terms of the agreement, Harvest shareholders will receive 0.1170 Trulieve shares for each Harvest share held, implying a price per Harvest share of $4.79, a 34% premium to the closing price on May 7, 2021.

The deal comes just over a year after Harvest and Chicago's Verano Holdings mutually terminated an $850 million merger deal.

This acquisition will allow Trulieve to expand its cannabis business across the nation as Harvest has specialized in similar vertically integrated cannabis operations in the west coast and northeast regions where Trulieve doesn't have access.

"Harvest provides us with an immediate and significant presence in new and established markets and accelerates our entry into the adult-use space in Arizona," Kim Rivers, Chief Executive Officer of Trulieve, said. "Trulieve and Harvest are leaders in our markets, recognized for our innovation, brands, and operational expertise with true depth and scale in our businesses."

"We look forward to providing best-in-class service to patients and customers on a broader national scale as we create an iconic US cannabis brand," Rivers added.

Mike Regan, the founder of Denver-based MJResearchCo told MJBizDaily that the business combination will make Trulieve's debt burden "more manageable" and gives the firm "scale in many other states, including Arizona and Pennsylvania."

The combined company is expected to have revenue of $1.2 billion and an adjusted EBITDA of $461 million in 2021.

It will have operations in 11 states, comprising 22 cultivation and processing facilities along with 126 dispensaries.

Trulieve stock traded down 5.21% as of 3:10 p.m. ET on Monday after news of the acquisition broke, while Harvest Health stock traded up 13.69%.