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KushCo shareholders will own about 49.9% of the coming company, with Greenlane owning the remaining 50.1%. The offer is a 6.3% premium over KushCo's 20-day volume weighted average closing price ending yesterday.
Shares of KushCo. rose 5.2% to $1.20 and a $159 million market cap. Shares of Greenlane climbed 23% to $5.03 and a $227 million market cap.
The combined company will be headquartered in Boca Raton, Fla., where Greenlane is based.
KushCo co-Founder and CEO Nick Kovacevich will become chief executive of the new company, while Greenlane's Bill Mote will be chief financial officer. The deal is expected to close in the late second quarter or early third quarter.
“We have reached a critical time in our industry where the leading operators are increasingly looking to partner with companies in the ancillary space who can reliably support their rapid expansion for years to come,” Kovacevich, said in a statement.
Both companies have reported falling sales. Greenlane today reported 2020 revenue dropped 25% to $138.3 million while KushCo reported fiscal year 2020 sales declined 23% to $113.8 million.
The deal is expected to generate about $15 million to $20 million annual run-rate cost synergies, the companies said.
The combined company will offer a product line of consumption devices, vaporizers and accessories and child-resistant packaging.