Item 2 – Identity of the Acquiror
2.1 State the name and address of the acquiror.
The Valens Company Inc. (“Valens”). The address of the head office of Valens is 96 Spadina Avenue, Suite 400, Toronto, Ontario M5V 2J6.
2.2 State the date of the transaction or other occurrence that triggered the requirement to file this report and briefly describe the transaction or other occurrence.
Effective November 8, 2021, Valens and Citizen Stash completed a court-approved plan of arrangement under Section 192 of the Canada Business Corporations Act (the "Arrangement"), pursuant to the arrangement agreement dated August 30, 2021 (the “Arrangement Agreement”).
Pursuant to the Arrangement, among other things, Valens acquired all the issued and outstanding Common Shares (including Common Shares issued pursuant to outstanding Citizen Stash restricted share units and in connection with certain financial advisory services rendered) based on an exchange ratio of 0.1620 of a Valens common share (a “Valens Share”) in exchange for each Common Share held.
In addition, Valens “cashed out” all outstanding in-the-money Citizen Stash options for their “in-the- money amount” and paid for the same by the issuance of Valens Shares (based on the same indicative trading prices).
The Arrangement is more particularly described in the information circular of Citizen Stash dated September 28, 2021 (the “Circular”) in connection with a special meeting of the securityholders of Citizen Stash. The Circular, the Arrangement Agreement, and other related documents have been filed on SEDAR and are available under Citizen Stash’s profile at www.sedar.com
Item 3 – Interest in Securities of the Reporting Issuer
3.1 State the designation and number or principal amount of securities acquired or disposed of that triggered the requirement to file the report and the change in the acquiror’s securityholding percentage in the class of securities.
Pursuant to the Arrangement, Valens acquired 106,265,303 Common Shares, representing all of the issued and outstanding Common Shares.
3.4 State the designation and number or principal amount of securities and the acquiror’s securityholding percentage in the class of securities, immediately before and after the transaction or other occurrence that triggered the requirement to file this report.
Immediately before the completion of the Arrangement, Valens did not own or control any Common Shares. Immediately after the completion of the Arrangement, Valens owned 106,265,303 Common Shares, representing all of the issued and outstanding Common Shares.
3.5 State the designation and number or principal amount of securities and the acquiror’s securityholding percentage in the class of securities referred to in Item 3.4 over which
(a) the acquiror, either alone or together with any joint actors, has ownership and control,
Pursuant to the Arrangement, Valens acquired, and following the completion of the Arrangement, Valens now directly has ownership or control of 106,265,303 Common Shares, representing all of the issued and outstanding Common Shares.
Item 4 – Consideration Paid
4.1 State the value, in Canadian dollars, of any consideration paid or received per security and in total.
Pursuant to the Arrangement, former holders of Common Shares received 0.1620 of a Valens Share for each Common Share held. In addition, the outstanding in-the-money Citizen Stash options, were transferred to Citizen Stash for their in-the-money amount, paid in Valens Shares.
Based on the closing price of the Valens Shares on the TSX-V on November 5, 2021 of C$1.76, being the last trading day prior to the completion of the Arrangement, the value of the consideration per Common Share was C$0.285 and the total consideration for the acquisition was C$30,298,363, all payable in Valens Shares.
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So it seems like 0.1620 X 106,265,303 = 17,214,979 Valens shares. So far.
With Valens shares outstanding about 185M.
That's about a 9.3% dilution for an additional 12.6M CAD in annual revenue to the already 93.1M CAD projected for this fiscal year or 13.55% added in annual revenue run rate.
And from the last fins report, CS operates with an 84% gross margin.
Valens should be able to double the output of CS within the first year IMHO.
It seems like a good deal with great contribution overall.
