And the consolidation in the cannabis industry continues.
We got word today that Curaleaf Holdings (OTCBB: CURLF) (CSE: CURA) is acquiring Eureka Investment Partners for $30.5 million.
With this acquisition, Curaleaf will get access to California’s wholesale market through a 110,000 square foot greenhouse facility in Salinas, CA, with the potential for a 270,000 square foot expansion. Combined, this could generate more than 50,000 pounds of dry flower per year. That’s at full-scale, of course.
While $30.5 million does seem a bit steep, I’m sure the guys running Curaleaf, which is one of the biggest players in the US cannabis space, know more about the value of this acquisition than I do.
With this acquisition in place, Curaleaf can now officially add California to its US footprint, which also includes Oregon, Nevada, Arizona, Maine, Massachusetts, Connecticut, New Jersey, Maryland, Florida, and New York, where the company seems to be one of the only cannabis players taking the whole state of New York seriously, not just the city.
Although the majority of New York residents live in the city, there are millions of New Yorkers that live throughout the rest of the state, which is mostly rural, and in need of more dispensaries. This is a great first-mover advantage for Curaleaf.
Curaleaf expects to do $400 million in revenue this year. It has very deep pockets, and a very big expansion plans.
The stock currently trades at around $8.15. The average analyst consensus on Curaleaf seems to be coming in at around $16.00. I think that’s a bit too optimistic. I’m a bit more conservative, with a one-year price target of $11.50, offering a potential gain of about 41%.