Cannabis stocks fall as Curaleaf becomes latest company to scale back a big acquisition

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Cannabis stocks were mostly lower Thursday, led by Curaleaf Holdings, after the company became the latest to scale back a previously announced acquisition following a massive re-rating of risk in the sector in the past few months.

Wakefield Massachusetts-based Curaleaf CURLF, -8.25% CURA, -8.20%  said in May it had reached a deal to acquire the Select brand from Cura Partners Inc., in an all-stock deal valued at C$1.27 billion, or $948.8 million. On Wednesday, Curaleaf said the companies had mutually agreed to amend the base consideration payable to 55 million Curaleaf shares from an original 95.5 million.

The company said changes in market conditions prompted the move and said the remaining 40.6 million consideration would be payable to Select equity holders upon reaching certain revenue targets in calendar year 2020, starting at $130 million with a maximum of up to $240 million.

The company also said a federal antitrust review of the deal has been completed, clearing the path for the deal to close. Cannabis deals have taken longer to clear than deals in sectors that are not subject to a federal ban, as regulators said they needed time to educate themselves on the business.

“Select valuation has fallen dramatically over the last few months, but Curaleaf was able to lower immediate dilution and make total dilution more contingent on performance,” said MKM analyst Bill Kirk. [Read More @ MarketWatch]