Vireo Growth (CSE: VREO) (OTCQX: VREOF) told investors in December that it planned to acquire four companies across the U.S.: Proper Brands in Missouri, Deep Roots Harvest in Nevada, WholesomeCo Cannabis in Utah and The Flowery (Bill’s Nursery) in Florida. But last week, when the company provided an update on the previously announced transactions, details about Bill’s Nursery were conspicuously absent.
The other three deals are now expected to close during the second quarter. The combined purchase price of all four companies was expected to be worth $397 million in Vireo stock, for $0.625 per share when the deal was originally announced. However, shares were lately only selling for $0.38.
The Flowery
The Flowery, which is also referred to as Bill’s Nursery, did not receive the same merger summation in the circular as the other three companies. Vireo noted that, as of Feb. 23, it had not entered into a definitive merger agreement with Bill’s Nursery and the exclusivity period under the memorandum of understanding had expired.
Vireo went on to say that Bill’s Nursery is not currently contemplated to be a part of the combined company “and may not be executed in the future.”
In October 2024, Vireo executed a non-binding memorandum of understanding with the company. Vireo and Chicago Atlantic, which has a lending relationship with The Flower, drafted an initial merger agreement, but the merger conversations failed to progress as quickly as the others.
Deep Roots
The deal for Nevada-based Deep Roots, which operates five dispensaries and a cultivation and manufacturing facility, looks to be in good shape. Deep Roots previously acquired The Source Holdings, which had four retail operations two provisional retail licenses and one operating facility for cultivation.
Revenue for 2024 was $69.5 million, an 8% increase over 2023, primarily the result of the acquisition of The Source.
As of Dec. 31, 2024, Deep Roots had working capital of $23.7 millions, which was down from 2023’s working capital of $39.5 million. That dip was driven by increased payables and accruals relative to the prior year, in part due to the acquisition of The Source Holdings.
Wholesome
Utah-based Wholesome’s deal also looks to be moving along. This company derives its revenue from cultivating, processing and distributing cannabis products through its one dispensary and wholesale sales in the state.
Revenue for 2024 was $47.5 million, an increase of 28% compared to revenue of $37.2 million for 2023. The increase was primarily attributable to increased patient count in Utah, increased delivery sales, increased product offerings and improved product quality.
As of Dec. 31, 2024, Wholesome had working capital of $6.7 million, a significant boost from the $1.8 million reported in 2023, reflecting a substantial improvement in operating cash flow.
Proper
Missouri-based Proper gets its revenue from cultivating, processing and distributing cannabis products through the company’s 11 dispensaries and wholesale channels. Revenue for 2024 was $90.4 million, an increase of 19% compared to 2023.
In 2023, Proper entered into a management service agreement with Nirvana Investments. In 2024, Proper completed the acquisition of SLCC, a single dispensary operation located in Kansas City, Missouri. The MSA with Nirvana and the acquisition of SLCC added five dispensaries to Proper’s full-year 2024 operating results, which drove the increase in sales from 2023 to 2024.
As of Dec. 31, 2024, Proper reported a working capital deficit of $3.4 million. The company experienced a net decrease in cash and cash equivalents and increased current debt.
Chicago Atlantic
The relationship between Vireo and Chicago Atlantic runs deep. Chicago Atlantic is a significant shareholder of Vireo. It also has a lending relationship with Proper, Deep Roots and Bill’s Nursery. Wholesome was the only company in the arrangement without a preexisting relationship with Chicago Atlantic.
In addition, Vireo CEO John Mazarakis serves as a partner of Chicago Atlantic Group LP.
Deep Roots and Proper have aggregate outstanding net debt with Chicago Atlantaic of $19 million and $27.4 million, respectively. That debt will remain outstanding when the mergers are consummated.
Vireo reported its earnings earlier this month, with fourth-quarter revenue totaling $25 million and full-year revenue of $99.4 million.
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