Stock price of Greenlane Holdings, Inc. (GNLN) surged over 32% after the cannabis focused service provider confirmed an all-stock merger of OTC traded KushCo Holding (KSHB), another cannabis accessory company. In accordance to the merger contract for every purchase of KushCo common stock, shareholders will receive approximately 0.2546 shares of GNLN, as a result, KSHB shareholders holding 49.9% of the company while GNLN having the decision making authority at 50.1%
The merged board of directors will consist of 4 members from GNLN and 3 members from KSHB with merger transaction expected to be finalized by the second quarter of 2021.
After the completion of the merger, the CEO of kushCo, Nick Kovacevich has been appointed to become the CEO while the Co-founder of GNLN Aaron LoCascioashas opted to become president of the combined companies.
Why this merger is transformative for both companies.
The merged company is expected to provide more value to consumers, with an extended supply chain, vast distribution network, licensed producers, various cannabis stores, and millions of clients. The company is projected to yield approximately $20M accumulated yearly costs, with a larger combined production reducing the overall costs giving the company an advantage over its competitors.
Furthermore, market capitalization over $350M and expected net revenue of $330M in 2021 has investors keen on how the net proceeds have immensely increased. The merger transaction is expected to be exempted from any tax due to income tax purposes bringing substantial synergies between the two business models.
GNLN offered a better-than-expected outlook for the current quarter and anticipates sales and profits to grow for the full year after the merger with KSHB. Furthermore, a larger distribution network and an increase in the cannabis retail market combined with a diversified product line has peaked investor interest in the company stock.