TerrAscend Announces the Acquisition of Ilera Healthcare

Ilera is a fully integrated seed-to-sale operator in Pennsylvania.

TORONTO, August 2, 2019 // - PRESS RELEASE - TerrAscend Corp., a global cannabis company licensed for sales in Canada, the U.S. and the E.U., has announced the signing of a definitive agreement to acquire Ilera Healthcare, one of five vertically integrated cannabis cultivator, processor, and dispensary operators in Pennsylvania, with such vertically integrated licenses also referred to as “Super Licenses” in the state.

Ilera’s cultivation and processing facility in Waterfall, Penn., includes a genetic library of over 170 cannabis strains, a state-of-the-art greenhouse designed for optimal plant growth and minimal environmental impact, clean CO2 and ethanol extraction capabilities, and leading-edge packaging technology. Ilera’s dispensary in Plymouth Meeting, Penn., was designed to create a welcoming, safe and secure environment for patients. In the next six months, the company expects to open two additional dispensaries in Region 1, which includes Lancaster, Philadelphia, Chester, Bucks, Berks, Delaware and Schuylkill counties. In addition to selling its products in its own dispensary, Ilera distributes its dried flower, concentrates, tinctures and topicals to 50 of Pennsylvania’s 52 medical cannabis dispensaries.

TerrAscend has agreed to acquire 100 percent of the equity of Ilera for total consideration of between US$125-$225 million, paid in a combination of cash and TerrAscend shares. On closing, TerrAscend will pay to the sellers US$25 million in cash, subject to customary closing adjustments, and an additional US$25 million worth of proportionate voting shares in the equity of TerrAscend equivalent to approximately 5,059.102 proportionate voting shares (which are each exchangeable for 1,000 TerrAscend common shares, being issued at an issuance price of US$ 4.94 per share, based on the 45 day volume-weighted average trading price of TerrAscend’s common shares as of Monday, July 29, 2019 of C$6.5307 and an exchange rate of C$1.3216 per US$1.00). Additional cash consideration of up to US$175 million in aggregate may be paid to the sellers based on Ilera achieving certain specified revenue and profitability targets, with staged payments being made in 2020 and 2021. The transaction is expected to close in the 4th quarter of 2019, subject to regulatory approvals by the Pennsylvania Department of Health as well as certain customary closing conditions. 

TerrAscend reiterates its current 2019 guidance of revenue in excess of CAD$135 million on its current business, which does not contemplate contribution from the Ilera transaction.

Ilera’s senior operating team – including CEO Greg Rochlin, Director of Cultivation Andrew Sack and Chief Scientific Officer Oludare Odumosu – will continue in management positions and are expected to work within the broader TerrAscend organization. All the employees at the company’s Waterfall cultivation and manufacturing site and their Plymouth Meeting dispensary site are expected to join TerrAscend’s rapidly expanding U.S. operations. Ilera is currently the second largest employer in Waterfall, Penn.

“Today’s news marks another important step forward in our U.S. expansion strategy,” said Matthew Johnson, president of TerrAscend Corp. and TerrAscend USA, Inc. “Greg Rochlin and the rest of the Ilera team have built a substantial business that delivers high quality, safe, efficacious medicine to patients through scientific innovation, operational integrity, and best-in-class patient education and service. Their team brings robust operating experience and scientific knowledge that will be invaluable as we scale our business in the U.S. and beyond. We see great potential in bringing Ilera brands and formulations to the other jurisdictions in which we operate. We also plan on launching California-born Valhalla Confections and State Flower brands and our leading premium Canadian cannabis brand, Haven St. into the Pennsylvania market. We are thrilled to have found a team that shares in TerrAscend’s values and vision and look forward to working together with Greg and his team as we continue to build the leading North American Operator (NAO) in the cannabis space.”

"It’s clear that we’ve found a great strategic and cultural fit with TerrAscend,” said Greg Rochlin, CEO of Ilera. “We’re proud of the company we’ve built and we’re excited to have found a partner who recognizes the quality and potential of our seed-to-store operations. TerrAscend’s roots in health sciences and their commitment to innovation and quality make them the ideal partner for us as we grow our business. We’re excited to become part of this inspirational team which has made substantial progress in becoming one of the leading companies in the sector, while putting patients first.”

Osagie Imasogie, chairman of the Board for Ilera Healthcare, said, “Our board is truly excited and fully supports this transaction. Together Ilera and TerrAscend bring a wealth of knowledge and expertise to the market. Our alignment will provide an even greater service of care to patients in our state."