Curaleaf Holdings, Inc. (CURA) Earnings Call Transcript & Summary

Shareholder or Cure leave shareholder, again, a better understanding as to where this deal sits right now. So with that, let's welcome in AV here on a Thursday morning, but good job putting this together. I'm sure a lot of people will be watching this live. And I'm sure a lot of people watching us later today once we post this. But long story short, this is going to give a good clear idea as to where things sit right now for shareholders in both companies.

Yes. I'm looking forward to this. It's clear, concise questions and direct from the horse's mouth with Boris, giving his complete perspective on where things sit and his vision for this deal. .

Indeed. With that, let's welcome in the Chairman and CEO of Curaleaf Boris Jordan, back to the podcast. Good to see you. How are you?

Good to be here, guys, and thanks for hosting this. We really appreciate it. .

Well, I appreciate you taking the time and giving us the, I guess, support and trust to put this all together. So on behalf of Andy and I, we appreciate you and the team doing this. But before we get into questions, are there any opening remarks that you'd like to address Boris?

Yes. I have an opening statement, which I'd like to go through, and then we can go into the Q&A. And I wanted to make sure that I want everyone to understand there are prepared questions that were sent in advance and I'm happy to answer it. But I also want to make sure that anyone who has a question can ask it now, no matter how difficult it is because I don't want there to be any feeling out there that I'm hiding from difficult issues or questions. I want to be able to as difficult as they may be. I want to be able to answer.

Well said. Okay. Go ahead.

Again, hi, everyone, and thank you for joining us today. And I'd like to spend a few minutes talking about 3 subjects: one, cure leaf and our offer. And that's important because 80% of our offer is purely stock, and so there may be people that don't know our company, and so I'd like to talk about that a little bit. And then the offering is a little bit complex, so I'd like to go through what the offering is. I'd like to also talk a little bit about what we see in Aurora, and I'd like to see -- tell people what our vision is for these 2 companies being together. . And as shareholders, those that are on here, whether you're a purely shareholder or an Aurora shareholder, you deserve 3 things. You deserve results, value and a clear vision for the future of this investment. And we believe our offer delivers all 3 of those things. So here's what I'd like to do. Let's talk about Curaleaf for a second. I've spent a decade building Curaleaf and I've invested hundreds of millions of dollars of my own capital into this company. And I think that that's 1 of the big differentiators of Curaleaf against a lot of other companies and that I didn't get my stock for free. I didn't -- wasn't a founder that got the stock. I actually bought into a company called Paliatec and ended up starting to invest in working with the management team to build the company and so I have a tremendous amount of skin in the game alongside all the other investors that have invested in Curaleaf alongside of me. We are the largest cannabis company in the world with operations in 15 states in the U.S. in 17 countries globally. Last quarter alone, we did $340 million in revenue and $70 million in adjusted EBITDA. Through the first half of the year, Curaleaf generated net income of $82 million, $50 million of operating cash flow and $17 million of free cash flow. Given the seasonality of our business, we would expect our cash flows to accelerate in the second half of the year as they do every year. Last year, we generated over $150 million of operating cash and $94 million in free cash flow. That means the strength of our operations funded by our obligations and growth investments with cash left over at the end of the year. This year, analysts project relief will generate $1.45 billion in sales, up 15% from last year and $284 million in adjusted EBITDA. We have some of the most well-known cannabis brands, both in the U.S. and in Europe. In the U.S., Select is the #1 vape brand across our markets, and Curaleaf is the most recognized global brand in cannabis, and that has a lot of value to it. We have 1 of the strongest balance sheets in the industry. We have $107 million in cash and debt is just 2.3x adjusted EBITDA, healthy manageable level. Last quarter, our international business grew 26% year-over-year, with real momentum in Germany, the U.K. And we're very excited about expanding into 3 new countries in the next few months, Spain, France and Turkey. I'm actually in Turkey right now speaking from here where we're launching our new facility with a combined population of 210 million people between those 3 markets. We also have multiple growth catalysts ahead in the U.S. and beyond. Obviously, 1 of them being the Schedule 3, I'm not going to spend a lot of time on that, but obviously, that's a major, major change in the U.S. market the medical 1 has already happened. We expect the adult use 1 to happen literally imminently. It could be today, it could be tomorrow, it could be next week. On adult-use rescheduling, we expect to hear the update, as I said, in the next couple of weeks. We also believe that the 28 guidance is going to come out is likely to be retroactive also for several years going back should give a lot of clarity on balance sheets, not only for Curaleaf but a lot of other cannabis companies in the U.S. And then obviously, the hemp legislation that we expect to expire in December 11 and is also going to help a lot of our businesses come back to organic growth as hemp was the largest drag on U.S. cannabis in the United States. So when you look at purely if you're looking at a profitable cash-generative global operator with a clear vision, a strategy to drive long-term sustainable growth supported by many regulatory and industry catalysts. Curaleaf's offer now to Aurora shareholders. Our offer implied $4 a share of value based on a combination of stock and cash when we first announced the deal. Let me break it down in plain English. For every 100 Aurora shares you own, you would receive USD 75 in cash and approximately 35 Curaleaf shares. Before our offer, those same 100 Aurora shares were worth approximately $276. We offered approximately 400 when we made our bid. That is a 45% premium and you don't simply cash out and walk away. You receive Curaleaf shares so you continue to participate in Aurora's assets and the future of the leading global cannabis company in the world. And as of last night's close, those 100 shares are now worth $421 now representing a 51% premium to Aurora price before our bid announcement, which is a result of the fact that Curaleaf shares have outperformed having increased 7% since we made the bid. And when you're accounting for Aurora's cash on its balance sheet, our premium is 110% and represents 1 of the highest premiums in total Canadian M&A in the last 10 years. And that means all M&A in every industry. This is 1 of the highest premiums ever paid in Canadian M&A. I'll be frank. The alternative for Aurora shareholders is reasonably bleak, a company getting smaller and less profitable by the day, a 6-year turnaround that is still not finished continued dilution without a clear vision and a share price that has declined 97% under its current leadership. That's not a turnaround. That's 6 years of shareholders waiting while management collects their grant grant giant industry-leading paychecks. I have heard directly from many of you. More than anything you want to know whether there is credible plans Auroras facilities currently produce approximately 50 tons of cannabis annually. On a comparable square footage basis, we believe we can double that output just as we have done in our facilities in the United States further proof that Aurora has been operating inefficiently is that it has had to buy in cannabis from third-party operators despite having plenty of its own capacity available to meet demand. And we have heard directly from people who have worked in and around these operations that execution has been a real challenge. We have a diversified platform to offer ACB shareholders. So this isn't a story about bad assets. It's a story about assets that haven't been able to perform to their full potential due to mismanagement. What is our vision for the combined business. From the start, our vision has been to create the absolute dominant wellness-focused cannabis company in the world. Our international focus has been on providing high-quality medical cannabis products to patients in search for natural medicines. In fact, we have numerous partnerships in the U.S. and Europe with university hospitals focused on research and medical and wellness cannabis product development. We invest more capital in R&D than any other cannabis company in the world. With Aurora, we can extend the lead we have today by creating an unmatched supply chain and leveraging our broad distribution network through which we sell excellent products and brands, all of which would generate approximately $500 million in international sales. Using Cure leave genetics and our grow processes, coupled with Aurora's indoor cultivation assets will create an unparalleled global player. We're very excited about bringing these 2 businesses together. This is the reason why we traded a premium to the group and always have. It's because investors have confidence in our scale, strategy, vision and execution. Why this combination works. When I first looked at the opportunity with Aurora, I immediately thought strategically it fits like a glove. Together, we would create the absolute unquestionable leader in cannabis outside the U.S. On a combined basis, looking at trailing 12-month numbers, we're talking more than $1.5 billion in revenue with roughly $0.5 billion outside the U.S. nearly $350 million in adjusted EBITDA, exposure to multiple U.S. regulatory and industry growth catalysts and at least $40 million in expected annual cost savings. To Aurora employees, I want to emphasize that we see this very much as a growth story, not a cost-cutting story. And we'd be honored to have you all as part of our future. We plan to hold a separate session in the coming weeks for all of you together with our CEO of International Juan Martinez, to speak to you directly and answer your questions. setting the record straight before we move into questions. Now I know there's been a lot of noise over the last few weeks. In situations like this, there's a lot of back and forth between both sides press releases after press releases. Pretty soon, everyone loses side of the question that actually matters. What creates the most value for shareholders. That is what we laid out in the facts in our shareholder communication. We posted online this week and on our micro site. You should also be receiving a hard copy in the mail. On those facts is that Aurora's own numbers point to a declining revenue, declining profitability, negative operating cash flow and a business that management itself expects will become smaller and less profitable. These are in our words, it's managements. And Aurora's business update yesterday doesn't change that picture. Sequential growth off of a 20% decline last quarter is not a turnaround. It's just an easy comparison. Yet management still sold stock in the past few months through its ATM program, so that their actions suggest a continued lack of confidence in the company's future. And it's worth noting that they have reaffirmed an outlook is still negative. At that point, Aurora's words and actions do not match. Even as Aurora says, our offer is too low, management is comfortable with constantly selling stock at prices significantly before -- below our offer, diluting your shares and making them less valuable. Think about that for a second. Management was willing to sell shares as low as $2.60 per share in July of this year, a 35% discount to our offer made 3 weeks later. But now they are telling you that $4 is not enough. -- and 421, based on Curaleaf share price last night, how does that make any sense? That's why we asked the Alberta Securities and Exchange Commission to halt and remedy Aurora issuances, while you consider our offer. You deserve to make this decision before management sells off very -- the very value that claiming to protect. In Aurora zone words issued in yesterday's press release, management appears ready to make more investments in Europe. If they came to the table to speak to us, they wouldn't need to waste shareholders' money. We already have these assets they are seeking to buy. In the U.K., Curaleaf is the #1 player with almost a 50% share. The recent acquisition they made is money wasted since we already have the pieces in place, cultivation, processing, clinic and pharmacy. Most importantly, if management generally believe $4 undervalues the company, and they were truly interested in getting more value for shareholders, they would talk to us -- from day 1, we've been ready to sit down with Aurora's Board and discuss terms. Aurora would not sign an NDA, they have not had a single counter offer. They have not engaged a single constructive discussion with us. They have not sent us a single counter offer, not one. We're going into Q&A in a second, so I'll leave you with a couple of closing thoughts. If you can't tell already, I'm passionate about this industry. I'm passionate about this company, and I'm passionate about the vision we have for the future. You'll also see that I don't shy away from tough questions. So ask them challenge us if there's something that we need to answer today, we will. If there's something we can't, we'll make sure we do it later. And at the end of the day, this is your investment, your decision, your future. With that, we're going into Q&A, some are presubmitted, some are coming in. Again, I want to thank the TDR guys, both Shadd and Anthony for hosting this session.

That's great. Great opening statement. Anthony, let's go into the questions. Let's begin with question number 1. I want to bring it up Okay. So I'll bring it up. So for CureLeav shareholders, what makes Aurora the highest return use of capital versus organic growth, debt reduction, buybacks or any or another opportunity. .

Listen, I firmly believe that the Non thing a company has to do is it's got to invest in growth. It's got to continue to grow. It's got to continue to dominate, and that's what this investment is about. We are investing in growth. We're investing in the supply chain, and we're investing in the fastest-growing market right now in cannabis by making this investment. We are not worried at all about debt. We're very comfortable where our debt is. We are paying down some of our debt, and we have plenty of cash to do that. We paid down about $3 million of debt every single month right now. So we are paying down debt. But Growth for us is more important because growth brings cash and then cash, then you can do other things with. You can either invest in your business, you can buy back shares, you could play down growth. And Cureleaf doing all 3, just to make sure. We're investing in growth with this deal, we are paying down debt, and we haven't been buying back rigs. So we're doing all 3 of those things. But in that priority that we think is the most important. Growth is first.

Anthony go ahead and no question number two.

This is Aurora's strongest argument is the value of its international medical business. What can Curaleaf do with that platform that makes it more valuable inside Curaleaf than as a stand-alone Aurora asset.

Listen, I want to make something very clear. First of all, I believe this industry needs to consolidate. This is a scale business, right? Whether you're medical or your consumer products, recreational cannabis, these are scale businesses. A lot of these small companies just can't survive at their scale today. If you look at just even Aurora's numbers that they've just put up in the last quarter, they did a $212 million in medical revenue, USD 219 million total. They had gross profit of $120 million, but their OpEx was $128 million. So they lost $8 million just there. This business Curaleaf has invested $500 million real dollars in international platform. They don't have the kind of capital, there isn't the capital available today in order to be able to do that. So it makes sense for them to consolidate into a larger player and give their shareholders an opportunity to participate in the upside on that deal. So I there isn't a real business there, right? They jumped from adult use to not adult use medical to not medical. They've picked certain segments that are getting cut. We have a distinctive strategy and we also have a very diversified portfolio. And that's a major important thing for shareholders of Aurora, right? They don't have a diversified we can lean on our U.S. business, which is a $1.2 billion business today, we can lean on our international business. We're opening up new markets. It's a smart investment for them to do it.

So when you -- yes, you look at this, you've been pretty clear that the offer represents full and fair value. But what are the, I guess, the 2 to 3 assumptions that matter most to that valuation? And where do you think Aurora's Board sees the economics differently because we've learned that they do see this differently so far.

Well, listen, I don't can't tell you what the Aurora Board thinks because almost every shareholder I've spoken to. And by the way, I've spoken to senior people within Aurora that don't want to don't want their management to know. And they have said that they believe that over 50% of the shareholder base is supportive and the majority of the employees have supported this transaction. And so I know by saying that probably a rural comment and say that's not true. But that is true. We're talking to employees. We're talking to shareholders all the time. And as I said, the value is in the global platform that this built. And you are merging into you're being brought in and merging and merging because you're getting 80% of Cure lead stock. And that was done on purpose guys it was listen, we could have put a cash bid together. We had plenty of banks that would finance a cash bid for Curaleaf on this deal. But we did this because we wanted Aurora shareholders to participate in the catalysts that we're about to have in the U.S. And if they move fast, I know there's another question about the deal structure. But if they move fast, they will understand 1 clear thing they will get the cure of shares faster and they'll be able to participate in that upside on the U.S. catalyst side, much, much faster. But by dragging this thing out for the 110 statutory days, many people don't know this. In Canada, you could close this deal in 35 days if there's an agreement on both sides. But by dragging this thing out, they are hurting their shareholders of not being able to participate in the upside in merging this business into a company like Curaleaf.

Yes, I've been scratching my head saying the same thing with the upside from a rescheduling catalyst, like why would you not want to get this done in the sum of the parts game versus the stand-alone, especially in due time versus dragging this out.

And a 51% premium as of yesterday, correct?

That tried as yesterday's close, it's a 51% premium. And obviously, as Curaleaf grows because of the 5 cap, their premium will grow. So they -- this is a very attractive deal. And I do not understand why -- I mean, frankly, I'm not in the old days, I remember the 1980s with these guys used new companies, but it almost feels like that, like you have like you remember the movie Wall Street, where these guys are sitting up there and the guys asking what they all are you guys doing, right? It almost feels like that, guys. Yes, you're getting good salaries, but look at look at their they just upped when we looked at their recent proxy when we looked at their the way they have structured their buyouts, they will get these huge Golden Parachute packages. Let me tell you some about Curaleaf. I don't get any guidance package if my company gets bought, right? I get nothing. -- because I wouldn't even think of going to my board with that. My job is to build the company for growth. My job is not to sit there and try to flip it and make money for myself. My job is to make money for my shareholders, of which I'm the biggest one.

So let me go off script for the investors of Aurora that say, "Look, if you want us, offer us more. Right now, it's not enough. What's your response to that?

Come and talk to me. I've made an offer, make a counter. They've made no counter offer did you anticipate that they would I don't want to say drag their feet, but just refuse to even give you a counter at this point in time with the process. I'm going to quote someone. I'm not going to name them. But I was told this by a certain senior manager of the company. All things being equal Borus, I'd like to run this company for another 5 years. Let me tell you something, if there's somebody that's better to run my company, please tomorrow. I'm a shareholder. My first thing is I want to make money. That's how I look at things, right? I want to make as much money on this investment as I possibly can. . And so I am not holding on to my seat as a CEO. It's an irrelevant fuckand-rounding or as far as I'm concerned. I want to make big dollars, big multiples on my investment in this company. So if there's somebody better to run this company, let them come in and run it. But I personally think these guys are I hate saying this, but they're trying to hold on to their jobs. There is no reason for Aurora to be independent. It has no chance to compete against global players like Curaleaf in this environment. And if it's not going to be them, we're going to do something with somebody else and their shareholders are going to lose because I don't believe there's a white night out there that has our balance sheet, our positioning, our distribution, our new countries that we're going into right now to to make this investment as efficient as it's going to be with Curaleaf versus somebody else. So sure, there might be somebody that they drag out, but there's not going to be any 1 where it fits as good as integral and that has the same catalysts and upside that Curaleaf does over the next 3 to 6 months where these people can make the Aurora shareholders can make a lot of money.

Well said. Well, next question.

Do we want to go question 4? I think you actually touched on the significant debt portion. We can talk about that or we can move to question 5, if you want, Anthony?

Yes. I think I think Boris, you can give a little bit more color on this, is Aurora's claim, Curaleaf carries significant debt how do you manage that without diluting Curaleaf shareholders? I mean you said you're repaying on a monthly basis right now, correct versus shoring up that debt on the balance sheet?

Listen, our debt is at 2.3x EBITDA very, very manageable from our patio. We're generating a tremendous amount of cash. It is not something I'm worried about. I keep seeing this on Twitter and stuff like that people just don't understand businesses, right One of the reasons Curaleaf carries slightly more depth than our competitors because I put $500 million into building this international franchise. There's your number, right? And so -- and if you look at our leases, those leases are running off over the next 5 to 6 years, right in time for when I think you're going to get interstate commerce coming into the play. Curaleaf is a well-planned company. Nothing is by accident. Have we made mistakes, Absolutely. Absolutely, we've made a mistake. We've exited markets. Everyone is going to make mistakes when you have such a fast-growing business. One, the fact is we have well planned what we're doing. We know what we're doing. We have a strong balance sheet. And frankly, we also have strong shareholders, right? This isn't my only business, right? -- if there was actually a problem, Pure Leaf would not have a problem. It's got me. Not only is the CEO is committed, but also somebody who's got capital. But that notice, I have not had to put every capital as this company has done, whether it's debt or equity, every single one, I've been a big investor. So I have put my money where my mouth is. I believe in this business, and shareholders should be comfortable with that because they're looking at someone that's got hundreds of millions of dollars invested in Curaleaf.

I think it's also important to outline too, that a lot of mistakes that U.S. companies have made is like mistakes that as beyond their control, and that's from a regulatory front as well. Timing, things get delayed, I get it, and this is why it's been long drawn out, but you also point to that the time has come for change, and it looks like it's here. So you have that upside potential as to what we just outlined and everybody knows from Wall Street to Bay Street in Canada right now that the opportunity that we're looking at is the U.S. opportunity that then segues into international as well, which is the future in a lot of ways. But continuing on the next question is, why does the offer include an exchange cap? explain what that is and why structure it this way?

Great question and really important to understand. Because normally, I wouldn't do this. If it was the U.S. and I had a 30-day period where I can close a deal, I would never put a cap on it. Surely, we are in the middle of a process that could be game-changing for the U.S. cannabis companies, right? We are going to be potentially significantly revalued on the back of these regulatory changes are happening. And frankly, they're happening now. So -- and I have under Canadian rules, I have to keep this offer open for 110 days. So what happens at Curaleaf revalues 2, 3 times during that period of time. I end up paying like $900 million for Aurora. That's just say doesn't make any sense. . So I had to cap it. But with that, I've offered them another dollar. And the fact is, it is likely that they're going to get that dollar because Curaleaf is appreciating right now. And so Curaleaf has to get to $17 and they get their $5. And we're trading, I think, at 14 now or something like that. 14 or something like that, right? So it is they're going it is likely that they're going to get to $5 in , but the cap is there to protect the Curaleaf shareholder.

Okay. Well said. Anthony, go ahead.

For a shareholder who just wants liquidity, why tender to Curaleaf instead of just selling Aurora shares on the open market today.

Listen, it's a free world. That's what I love about capital markets. You want to sell and take the 40% premium. I'm super happy for you. You've made your money, you've got now. But a lot of shareholders in Aurora, unfortunately, have been in the stock for a long time, right? They've been in it let's be honest, guys, this stock traded at over $1,000 at a certain point in time, right? So there's a lot of people that I think the term is called bag holders. -- that would love to make their money back. That's another reason why I offered stock as a turn because people then get to still participate in the upside to make capital back in a much bigger, much more diversified company that they're in today. And so that's 1 of the reasons that I structured the deal the way it is. And I think it's a well-structured deal for people. And again, if shareholders put pressure on the board and on the company and they write them, we can get this deal done in 30 days. I think this is a for these guys to the table.

This next 1 is a good question and it's from an actual Aurora shareholder who watches the show. If Aurora can't compete, as you've said, how does that track record with how does that track with leading positions in Canada, Germany, Poland, Australia and New Zealand. They have no debt, substantial cash, EU GMP assets and as reaffirmed growth. And I don't think they are a leading position in Canada as it comes to that.

They're not leading anywhere except Poland, let's be completely honest in Poland because they got there early and bio them. Congratulations. I always give people credit where credit is due. They are a strong player in Poland but because they got there early and they built a good business there, right? So good for them. But together with our business, that will be the absolute dominating business in Poland. And the other thing I will tell you, though, about the and none of the other markets are there dominating or leaders in. They're just not. They're not even on the radar screen in those markets, except Australia, where their business is declining every quarter substantially, like substantially. So and it's been a major drag on their business. But I just want to make a clear point that by combining that into our business, they are going to be able to do substantially better than they're doing today because we're working together are going to win. They have a 50% SG&A, over 50% guys to our 27, sorry, in our international business. U.S. is 29 now. But international business is so and 1 of the reasons their SG&A is so high is that they are the marketing spend is $65 million on a business that generates $12 million, whatever it was, I said, marketing costs. Curaleaf, which is a $1.5 billion business runs like a $22 million, $25 million marketing budget. I mean, give me a break. So they're really selling their product in these countries? Or are they basically pushing their product.

And how much is how much are they undervaluing your distribution, how it can accelerate their revenue if this is if this deal is done, pairing their cultivation with your distribution in the EU on a go-forward basis that I think they're not recognizing.

I don't think they understand what Curaleaf has because they've never talked to us I don't think they understand the power of our business in Europe. We are the global leader in all those markets, except for Australia, we're a small player in Australia, but there's a reason for that. Australia like California right now is in a very difficult place where the plumbing is all wrong and it's hard to make it almost impossible to make money. So I'm not going to go and put real dollars substantial dollars in a business that's going to lose New one. I'm focusing on those markets where I can make money right now, right? I have a small presence there to make sure that if the situation changes, I can quickly ratchet out. But I don't invest in markets where we're not going to be able to make money. And so that's our focus right now. It is invest in those markets to make money. And by the way, Turkey, France, Spain, all of those markets are substantial. Now they have a presence in Fred. But working together with us and our partner, we're about to announce a partnership with a major pharmaceuticals globally in that market, that will be a huge win for both companies. Again, if they sat down and talk to us any rational being in the investment world would say, holy should this is a match made in heaven. Let's do it. Let's take the stock and let's ride this thing together. But We're not having that contract. We don't see a white night we have no reason to raise our bid. And even at this bid price where we are now, this shareholders make a lot of money, they get the upside and the again, a lot of people don't realize. They are swapping Aurora shares for 80% of the Aurora shares for Curaleaf shares. That's what gives them the upside in this deal above the 45% we're already given. And by the way, I want to make it clear again, we are paying 1 of the highest multiples ever paid in Canada in an M&A. People don't seem to realize that. They're just emotional, as you said, Chad, because they hold the shares. The 1 thing I would want to teach something that I worked a lot with George ours. I can tell you right now, 1 thing you said to me, "Boris, don't get emotional about your losses, okay? The losses are there, then you got to take them and you got to move on. Sitting there and saying, "I paid $15, and therefore, you need to pay me $15 a share. That's just Hogan. I mean, curly traded $23. My stake in CureLeaf was worth $4.5 billion of Boto. Do I get emotional about the fact Yes. I was stupid not to sell. But the fact is I took it when I'm I stepped in as a CEO and I said, "I'm going to fix everything, and I'm going to make it worth $4.5 billion again. That's where I am. And that's what these I'm giving them the opportunity to step in to cure leaf alongside me that a person who's got a tremendous amount invested that is going to work day and night, even in my crazy 60 years of age because I believe in what I'm doing. .

Acceptance is clarity as it not gets you in the action mode. Is it not..

It does. Yes. That's a good way to put it. .

Yes, Anthony, go ahead. .

You spent weeks calling Aurora's management ineffective. Isn't it a little rich to now be fighting this hard to acquire the company, they've been running. .

Listen, management and the company are 2 separate fracking things, right? And listen, I I lived -- I had a nice life in Bocton, Florida, okay? I'm now living in FulkonStanford, Connecticut, okay I'm in my office every day. okay? their CEO lives in, I think, North Carolina and their compassed in Toronto or Vancouver, something of that. . So guys, I am committed. I am working hard that company has -- that company's assets are better with Curaleaf than they are with their current management. I think I've made that point. Their assets will perform at a double the rate they are today. And 1 of the other questions, I don't know if it's here, but I was asked this morning is for us, if you're getting all these synergies, why are you not sharing those synergies in this bid? Well, first of all, I am I'm paying a 45% premium to the stock. But second of all, -- the synergies are not cost synergies, where I'm going to cut out their employees. That's not the point. I actually need their people. The business is growing. The synergies are in my know-how. -- things that we have built over 10 years at Curaleaf where we're able to, for instance, take their facilities, the ones they have today and double the capacity out of them because of our know-how. The dynamics that we invested in that grow in those facilities much better than they would grow somewhere else. These are things that we have developed and invested hard dollars in. That's where the synergies are coming from. Are there going to be some cost synergies, sure, but those synergies are a minuscule part of the $40 million. Most of the $40 million comes from Curaleaf know-how that's going to make those facilities and those businesses perform better.

Something important to discuss too, and I want to segue into the next question. How do you view the possibility of a competing bidder? What, I guess, differentiates your offer from any other alternative that may emerge here in the future if possible?

Well, first of all, to make this bid, you've got to have the international footprint that we have unless you want to be like, for instance, I look at my competitors in the U.S. Are they going to go and buy this thing and then have to put in another $0.5 billion into building the distribution? And I built no. they'd rather put that and rightfully sold, they're smart guys. They'd rather put it into Texas, Virginia, Georgia, the U.S. markets that are coming online as will as well in addition to what I'm doing. But I behave the sunk distribution and business. I had the foresight to go do it. I operated in Europe for 30 years. I built 1 of the biggest data center companies and 1 of the biggest insurance companies there. as an entrepreneur. I know the landscape. I know how to function in that market. And so it was right for me to make the decision to go into that market and build this business. It was right for Curaleaf. It's not right for everybody. Will those guys come eventually, they will. They'll probably do it through acquisitions of bigger platforms. But this is not that kind of platform. This is mainly a cultivation business. It's not a distribution. They just spent $2.5 million buying some zinc license company in U.K., which will take 10 years to build out to what we have in the U.K. have to spend $100 million to do it.