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Law360 (April 28, 2020, 5:42 PM EDT) -- Cannabis company Cresco Labs said it has canceled its plan to acquire Tryke Cos. LLC for $282.5 million, saying regulatory delays, a decline in capital markets and the coronavirus pandemic all led to the companies' mutual decision to call off the deal.
The agreement, which was announced last September, included $55 million in cash. Tryke owns the Reef Dispensaries brand, which includes stores in Las Vegas and Phoenix.
Cresco CEO Charlie Bachtell said in Monday's announcement that the Chicago-based company's resources will be better invested in existing markets.
"Terminating the agreement puts Cresco in a position to better manage any potential future implications from COVID, taking advantage of the current macro environment and succeed in achieving our goal of building the most important cannabis company in the U.S.," Bachtell said.
A representative of Reef did not immediately respond to a request for comment Tuesday.
Cresco also announced Monday it had a net loss of $45.2 million in the fourth quarter of 2019, compared to $4.4 million in the prior-year period. Late last year, the company canceled a proposed plan to acquire Florida medical marijuana dispensary VidaCann Ltd., citing a need to strengthen its balance sheet and enter the Florida market later in a "more capital-efficient" way.
In November, Cresco and another cannabis company, Origin House, trimmed the valuation of a planned merger to $370 million from $827 million. Cresco said in January that the Origin House deal had closed.
Cresco said it agreed to pay equity valued at $1.25 million as total consideration for the termination of the agreement with Tryke, adding that it has no outstanding acquisitions or major capital expense obligations, "leaving Cresco's balance sheet unencumbered."
The cancellation of the acquisition also comes amid a wave of other terminated deals in the cannabis industry in light of the COVID-19 crisis.
--Additional reporting by Diana Novak Jones. Editing by Marygrace Murphy.
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