Alcanna Attempts To Boost Shareholder Sentiment For Arrangement With Sundial

On Wednesday, alcohol and cannabis retailer Alcanna Inc. LQSIF CLIQ reminded its shareholders to approve a proposed plan of arrangement with Sundial Growers Inc. SNDL.

Sundial, Reddit's favorite marijuana company, agreed to acquire all of the issued and outstanding common shares of Alcanna in October.

And while the transaction has been unanimously approved by the boards of directors of both companies and was expected to close in December 2021 or the first quarter of 2022, the deal still hasn't gotten the green light from Alcanna's shareholders.

Earlier this month, the companies postponed the special meeting of Alcanna shareholders to consider, and decide if it was advisable, to move the special resolution to approve the proposed plan of arrangement with Sundial to Friday, Jan. 7. The meeting was initially scheduled for Tuesday, Dec. 14.

Only 56.29% of the Alcanna shareholders eligible to vote had voted by Dec. 10, which was the original deadline to vote by proxy. Now the deadline is pushed to Wednesday, Jan. 5, 2022.

Alcanna's board of directors earlier determined that the transaction was in the company's best interest and its shareholders.

Leading proxy advisory firms Institutional Shareholder Services Inc. and Glass Lewis & Co., LLC has also recommended that Alcanna shareholders vote "FOR" the arrangement resolution.

The Acquisition Details

Under the terms of the agreement, Alcanna's shareholders will receive 10.69 common shares of Sundial for each Alcanna common share held.

The consideration represents a deemed value of approximately $8.08 per Alcanna share and implies an approximate 17% premium from the closing price of Alcanna shares on the TSX as of Dec. 29, 2021.

Sundial recently reiterated its commitment to the proposed plan of arrangement with Alcanna and announced ISS' support for the plan.

"Despite recent market volatility, we remain committed to our plan of arrangement with Alcanna," Sundial's CEO Zach George recently stated.

What It Means For Sundial

The acquisition is expected to deliver more than $15 million of additional EBITDA on an annual run-rate basis through synergies and other strategic initiatives.

It includes Alcanna's longstanding liquor business with trailing twelve months free cash flow of $16.4 million on a built-out retail platform, as well as an enhanced exposure with investment in Nova Cannabis Inc, a publicly listed, pure-play cannabis retail operator, in which Alcanna holds an approximately 63% equity interest.

Currently, Alcanna operates 171 locations predominantly in Alberta under its three retail brands, Wine and Beyond, Liquor Depot and Ace Liquor.

Nova operates 62 stores across Alberta, Saskatchewan, and Ontario, primarily under the Value Buds and Nova Cannabis banners.

George earlier explained that the company intends to "position all of our retail exposure for profitability and strive to work with Canadian licensed producers in order to delight consumers with quality cannabis products.

"Alcanna's value-focused model in liquor retailing has created market stability, and we believe that the replication of this playbook in cannabis has strong potential to drive a similar result," the Sundial CEO added.

LQSIF Price Action

Alcanna's shares traded 1.30% higher at $5.46 per share at the time of writing on Thursday morning.

SNDL Price Action

Sundial's shares traded 4.03% higher at $0.6139 per share at the time of writing on Thursday morning.