Law360 (March 26, 2020, 10:12 PM EDT) -- Cannabis companies Harvest Health & Recreation Inc. and Verano Holdings LLC announced on Thursday that the pair have abandoned plans for an $850 million merger announced last year, citing concerns about the impact of the coronavirus pandemic.
Chicago-based Verano's CEO George Archos said in a news release that the nine-figure transaction had been held up by the antitrust approval process, and that the global disease outbreak promised to put up additional roadblocks.
"Now with the COVID-19 pandemic often being dealt with in the very agencies that must approve the transaction, it has become clear that this combination would not be completed within the established time frame," Archos said.
Harvest CEO Steve White echoed those comments, saying "current market conditions" were unfavorable for the planned deal. Still, White said the Arizona-headquartered company plans to press ahead with other initiatives.
"Recent capital raising efforts have afforded the company sufficient resources to continue to invest in strategic projects while moving toward profitability," he said.
When the deal was announced in March last year, Harvest said the merger would create one of the largest multistate, vertically integrated cannabis operators in the U.S. with respect to the number of licenses held and facilities permitted.
Harvest recently announced that it would abandon another planned acquisition involving a California cannabis company called Falcon International Corp.
Those two companies successfully asked an Arizona federal court last month for a deadline extension in a case over a stalled merger. The companies said the extension was needed as they wrangle the two dozen parties involved into a pending American Arbitration Association proceeding, folding the $240 million breakup and allegations of suspect bookkeeping and cannabis law violations by Falcon into private resolution.
Harvest announced the proposed acquisition of Falcon in February 2019, part of a wave of mergers announced that year as cannabis companies flush with investor cash inked blockbuster deals scraping nearly billion-dollar valuations. A month later, Harvest announced the now abandoned merger with Verano.
--Additional reporting by Matthew Guarnaccia and Jack Queen. Editing by Emily Kokoll.
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