Valens Cannabis Co. Closes Acquisition Of US CBD Producer Green Roads

Cannabis product manufacturer The Valens Company Inc. VLNS VLNCF has purchased Green Roads and its manufacturing subsidiary for $40 million in a cash-and-stock transaction.

Transaction Details: The sum includes approximately $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 previously announced acquisition, the Kelowna, British Columbia-based company, agreed to pay an additional $20 million in contingent consideration payable once the U.S.-based, privately owned CBD company achieves certain EBITDA milestones. The deal will represent roughly EBITDA milestones if all milestones are met in 2022.

Stifel GMP advised Valens throughout the sale process, while Stikeman Elliott LLP and Foley Hoag LLP provided legal counsel. Greenberg Traurig LLP acted as legal counsel to Green Roads, and Cowen served as its exclusive financial advisor for the transaction.

What It Means For Valens: The transaction allows Valens to enter the U.S. CBD market and strengthen its position in the Canadian as well as global market by boosting its offering with a myriad of Green Roads' CBD products.

"With the closing of this acquisition, Valens now has a significant presence in the largest cannabinoid market in the world, representing a monumental step in our international expansion strategy and furthering our vision of becoming a global manufacturer of cannabis consumer packaged goods," Tyler Robson, CEO, co-founder, and chair of Valens, said Monday "We expect to realize strong synergies and to aggressively pursue various strategic opportunities that are now available to our combined business through this transaction, including expanding the distribution of our ever-growing product offerings overseas and further disrupting the North American market with innovative cannabis products."

What's Next For Valens: The company reported plans to invest roughly $10 million into the Green Roads business and to capitalize on the growth of the CBD market in the U.S., as well as introduce Green Roads formulations in Canada. According to Brightfield Group, the U.S. CBD market is poised to hit approximately $15.9 billion by 2026.

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