Onex-Backed Emerald to Buy Cannabis Trade Show Operator MJBiz

(Bloomberg) -- Trade show operator Emerald Holding Inc. has acquired closely held media and events company MJBiz for $120 million in cash, according to a statement provided to Bloomberg News.

The deal will give Emerald, whose largest shareholder is Toronto-based investment firm Onex Corp., a foothold in trade shows focused on the cannabis industry. 

MJBiz runs MJBizCon, an annual event in Las Vegas that drew 27,000 attendees last year, Emerald Chief Executive Officer Hervé Sedky said in an interview. 

While some of Emerald’s events feature exhibitors in the cannabidiol, or CBD, industry, this is the company’s first foray into a dedicated trade show serving the industry in cannabis that contains THC, the psychoactive compound in marijuana, which remains illegal under federal law.

“CBD has been one of the fastest growing sub categories for us within some of our retail, general merchandise trade shows,” David Doft, Emerald’s chief financial officer, said in an interview. “The growth potential of this sector is no secret to us.”

The deal comes amid a wave of consolidation among companies that sell cannabis, as well as so-called ancillary companies that don’t touch the plant, which remains illegal under federal law.

Earn-Out Provision

Depending on earn-outs for MJBiz, Emerald could pay anywhere from $30 million to $50 million in additional cash for the company in early 2023, Doft said.

The transaction is almost half the size of Emerald’s market value of $282 million. Taking debt into account, Emerald’s enterprise value is more than $900 million, according to data compiled by Bloomberg.

The transaction, Emerald’s seventh and biggest according to data compiled by Bloomberg, is part of Emerald’s effort to spark growth following a rocky period during the coronavirus pandemic in which most of its events were canceled. Shares of the company, which raised $303 million in its 2017 initial public offering, have fallen 26% in the past year. The shares closed up 1.3% to $4.02 in New York trading Monday.

The company has staged 43 events since June. Sedky said that, despite concerns about the omicron variant, he’s seeing pent up demand and hasn’t canceled any events for 2022.

MJBiz Publications

The acquisition includes MJBiz’s media publications, which the Emerald executives called the core of the deal.

“Tying in that content and insight to the event furthers the must-attend nature of the annual trade show,” Doft said. 

MJBiz was founded in 2011 and was previously owned by Anne Holland Ventures Inc, according to its website. It had $27 million in revenue last year, according to the statement. 

“Integrating with a larger organization provides the additional resources and channels to unlock the next phase of MJBiz’s growth,” Cassandra Farrington, MJBiz’s co-founder and chair of its board, said in the statement.

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