SNDL to acquire rival cannabis player Valens in all stock deal
Aug. 22, 2022 9:54 AM ET
The Valens Company Inc. (VLNS), VLNS:CASNDL
By: Dulan Lokuwithana, SA News Editor6 Comments
SNDL (SNDL) announced Monday that the Canadian cannabis company inked an agreement to acquire the domestic rival The Valens Company (NASDAQ:VLNS) for nearly $138M in an all-stock deal.
Per the terms, SNDL will buy all VLNS common shares other than it already owns in exchange for 0.3334 of SNDL common share for each VLNS share, and VLNS investors will own ~9.5% of the pro forma entity.
The consideration implies $1.26 per VLNS share and indicates a premium of 10% based on the stock’s trailing 30-day volume-weighted average price.
With more than 555K square feet of cultivation and manufacturing space and 185 cannabis stores, the combined entity will be a vertically integrated cannabis platform operating as SNDL Inc. The transaction is expected to close in Jan. 2023.
The transaction is expected to increase SNDL’s cannabis market share to 4.5%, making it one of the top 10 marijuana players. In addition, the companies plan to generate over $10M cost synergies and more than $15M of additional EBITDA annually with the combination.
With nearly $314M in net cash and zero debt, SNDL “will continue to have one of the strongest balance sheets in the North American regulated cannabis industry,” the companies said.
SNDL shares jumped after the company’s Q2 results last week as the company reported C$223.7M in revenue thanks to sales from liquor and cannabis retail segments.
