Valens Enters US CBD Market With Green Roads Acquisition

Cannabis products producer The Valens Company Inc. VLNS VLNCF is poised to take over Green Roads in a cash-and-stock transaction.

The M&A Deal: The Kelowna, British Columbia-based company agreed to purchase all issued and outstanding shares of Green Roads — a U.S.-based, privately owned CBD company — and its manufacturing subsidiary for $40 million.

The price tag includes roughly $25.4 million in Valens common shares at an indicative price of $2.5088 per share and up to $14.6 million in cash.

Under the terms of the agreement, Valens opted to pay an additional $20 million upon achieving certain EBITDA milestones in 2022.

Stifel GMP is advising Valens throughout the sale process, while Stikeman Elliott LLP and Foley Hoag LLP act as legal counsel. Greenberg Traurig LLP agreed to act as legal counsel to Green Roads, and Cowen is acting as its exclusive financial advisor.

What It Means For Valens: The acquisition allows Valens to enter the U.S. CBD market.

Tyler Robson, CEO of Valens, said Tuesday that the transaction "represents only the first step in our US expansion strategy as we expect to continue to unlock complimentary, revenue-generating opportunities while we forge our presence and build our reputation in the world's largest cannabinoid market."

The collaboration would also strengthen the company's leadership team as well as expand its product portfolio with a myriad of high-margin products, including oils, ingestibles, topicals, pet products, capsules and soft gels.

What's Next: Valens disclosed its plans to launch Green Roads formulations in Canada.

"With this transaction, we are able to further this mission and grow our community by reaching new markets, consumers, and partners both north of the border and globally with one of the most trusted leaders in the cannabis consumer packaged goods manufacturing space," Valens President and COO Dale Baker said in a statement. 

The move follows the company's recent CA$24.9-million ($19.68 million) acquisition of Canadian edibles manufacturer LYF Food Technologies Inc.

VLNCF Price Action: Valens shares were trading 6.06% higher at $2.80 at last check Tuesday. 

Photo Source: CNW Group/The Valens Company Inc.