A U.S. pot company run by former executives from Goldman Sachs Group Inc. and Bank of America Corp. will begin trading in Canada Monday with a market value of almost $1 billion.
Ayr Strategies Inc., which will trade on Toronto’s NEO Exchange under the symbol AYR, is the offspring of Canada’s first cannabis-focused special purpose acquisition company. Known as Cannabis Strategies Acquisition Corp., the SPAC was formed in 2017 and recently acquired five pot firms operating in Nevada and Massachusetts that generated more than $100 million in revenue in 2018.
Unusually for the nascent cannabis industry, Ayr’s businesses also reported earnings before interest, taxes, depreciation and amortization of about $30 million in 2018. The company, which produces, distributes and sells the drug, including from dispensaries in Reno, plans to roll up more pot companies that generate positive Ebitda.
“We want to be known as the disciplined people in cannabis, with a disciplined approach to growth,” Chief Operating Officer Jennifer Drake said in a phone interview. “That doesn’t mean we won’t be aggressive, but we will be very disciplined in our growth organically and very disciplined in future acquisitions.”
Drake is a former managing director at Goldman Sachs and Ayr Chief Executive Officer Jonathan Sandelman was a former president at Bank of America Securities.
Ayr will begin trading with a market value of about $935 million, making it the second largest U.S.-focused pot company to list on the NEO after Columbia Care Inc., another SPAC offspring, launched in April. SPACs raise money via an initial public offering for the purpose of acquiring existing companies.
Ayr is targeting the acquisition of companies that generate $75 million to $150 million of revenue generating $30 million to $50 million of adjusted Ebitda in 2019, with a similar volume of acquisition activity planned for 2020, according to its prospectus filed in February.
Its goal is to become one of the top five U.S. multi-state pot companies within five years, when they expect the top companies will be able to generate 20 per cent Ebitda margins and multiples that are 15 times those of consumer packaged goods companies, according to Sandelman.
“We are not building a company to sell, we are building a company to operate,” he said.
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