The Valens Company Buys Citizen Stash For $54.3M In All Stock Deal, To Create Company With $3.8B Addressable Market

The Valens Company Inc. VLNS VLNCF and Citizen Stash Cannabis Corp (formerly Experion Holdings Ltd) CSC (OTCQB: EXPFF) confirmed Tuesday that they have signed an agreement under which Valens will acquire all of the issued and outstanding common shares in an all-share transaction. The transaction is valued at approximately $54.3 million on an enterprise value basis.

The news comes on the heels of the Valens’ largest pre-roll manufacturing agreement to date.

What happened

Under the new deal, Citizen Stash shareholders will receive 0.1620 of a Valens common share for each Citizen Stash Common Share held. The exchange ratio implies a premium per Citizen Stash Common Share of approximately 35.1% based on the 15-day volume-weighted average price of the Citizen Stash Common Shares on the TSX-V and the Valens Shares on the TSX as of the close of markets on August 27, 2021.

"We are excited to join forces with Citizen Stash's experienced team and broaden our offerings in the flower and pre-roll verticals with a best-in-class brand,” said Tyler Robson, CEO and board chair of Valens. “In short, this strategic acquisition will allow Valens to significantly expand its presence in the recreational market and capture a share of the largest categories of the Canadian cannabis space without the burden of a high-cost growing infrastructure.”

Why it matters

The Citizen Stash Acquisition is expected to be accretive to Valens in 2021 and 2022 before synergies and will provide Valens with strategic, asset-light expansion into flower and pre-rolls, the largest segments of the Canadian cannabis market currently accounting for over 70% of retail sales.

The acquisition combines Valens' leading cannabis 2.0 product manufacturing capabilities with Citizen Stash's robust premium flower offering to create a leading player in the Canadian cannabis industry with a total addressable market of $3.8 billion with a portfolio of innovative products, across all categories, and a strategic focus on the highest margin segments.

Who Helped Make It Happen?

Stikeman Elliott LLP is acting as legal counsel to the Valens Company. Fasken Martineau DuMoulin LLP is acting as legal counsel to Citizen Stash and Hillcrest Merchant Partners Inc. and Evans & Evans, Inc. are filling the role of financial advisors to Citizen Stash.

More recent news from the Valens Company:

The Valens Company CBD Products Reach Japan Via Its Subsidiary Green Roads And Tele Marche Co.

The Valens Company Moves Closer To Entering Quebec Cannabis Market – The Third Largest In Canada

Price Action

The Valens Company’s shares were trading 3.57% lower at $2.35 per share at the time of writing Tuesday morning.

Photo: Courtesy of Esteban Lopez on Unsplash