When Canadian cannabis company Cronos Group Inc. bought U.S. CBD startup Lord Jones for $300 million, the deal was noteworthy for two reasons: that the acquisition price was equal to 75 to 150 times the young company’s 2018 revenue of between $2 million and $4 million, according to a person familiar with the matter, and that a fund co-founded by Cronos’s CEO and a longtime director stood to collect 40% of the purchase price, including more than $20 million in fees.
According to another filing with Canadian regulators, Gotham Green’s Goreinstein disclosed receiving roughly $23 million in Cronos stock — 40% of the stock included in the deal, which was $225 million in cash and $75 million in stock — identifying it as “related to an acquisition or disposition pursuant to a takeover bid or acquisition” on Sept. 5, the day the Lord Jones acquisition closed.
Lord Jones — founded in 2017 by California married couple Robert Rosenheck and Cindy Capobianco — approached Cronos for the sale, after its co-founders decided that it needed a partner to expand the business, a Cronos spokeswoman said in an email to MarketWatch.The special committee negotiated the deal and voted unanimously in favor of it, according to Cronos.
Zandberg wrote in an email that current sales multiples for U.S. cannabis companies are 2.7 times full year 2020 revenue for the largest marijuana companies, 1.4 times sales for mid-size weed businesses and 0.9 times revenue for the smallest. Private companies are typically discounted 40% to 50% versus public revenue multiples, “but in the current selloff that discount has narrowed ,” Zandberg wrote.
You got to be fucking kidding me.
Sweet. More shady ceo
All that'd wrong with capitalism!
Cannabis industry will make a very few very rich and make a great many very poor.
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