Cannabis Giant SNDL Grows Bigger: Finalizes Valens Acquisition Becoming 'A Leader And Trusted Partner' In Canadian Marijuana Space

SNDL Inc. SNDL completed the previously disclosed acquisition of all of the issued and outstanding common shares of The Valens Company Inc. VLNS VLNS, other than those held by SNDL and its subsidiaries, pursuant to a plan of arrangement under the Canada Business Corporations Act, for total consideration of approximately CA$138 million ^{($103 million)} consisting of common shares of SNDL and assumption of Valens' CA$60 million non-revolving term loan facility.

With approximately CA$262.5 million in net cash and no debt, SNDL will continue to have one of the strongest balance sheets in the North American cannabis industry. The combined company will operate as SNDL Inc., headquartered in Calgary, Alberta.

Key Transaction Highlights

• As a result of Valens' low-cost platform, SNDL will enhance its product line while offering pricing flexibility to retail partners.

• Combining SNDL's cannabis cultivation operations with Valens' low-cost biomass procurement capabilities will enhance SNDL's ability to offer a wide range of customized products to meet customer and consumer desires.

• The combination of SNDL and Valens is expected to deliver more than CA$10 million of annual cost synergies. Together with incremental revenue from greater distribution of Valens products, it is estimated that the transaction will deliver upwards of CA$15 million of additional EBITDA on an annual run-rate basis through synergies and other strategic initiatives.

"This is an exciting day for SNDL as we become stronger and more adaptable, with capabilities that provide us an opportunity to become a leader and trusted partner within the Canadian cannabis industry," stated Zach George, CEO of SNDL. "SNDL's existing consumer packaged cannabis business will be transformed by Valens' high-quality extraction, processing, and manufacturing capabilities. Broad capabilities in all relevant product categories will further our goals of bringing people together through exceptional products and experiences. With the close of this transaction, we will focus on integrating our assets and teams while delivering both cost synergies and incremental revenue from greater distribution of Valens products."

Governance and Leadership

The company is announced that Frank Krasovec has been appointed to the board of directors, effective January 17, 2023. The board now consists of six directors. Zach George will continue to serve as CEO of SNDL and Tyler Robson, the former CEO of Valens, will join the leadership team as president of cannabis, effective January 17, 2023. Andrew Stordeur, SNDL's former president and COO has left the company effective January 13, 2023.

Transaction Details

Pursuant to the transaction, former holders of Valens shares, received from SNDL, in exchange for each Valens share held, 0.3334 of a common share of SNDL . In connection with the transaction, SNDL issued an aggregate of 27.6 million SNDL shares to Valens shareholders as the consideration.

Following the closing of the transaction, there are 260.7 million SNDL shares outstanding, with existing SNDL shareholders holding approximately 89.4% of such outstanding SNDL shares and former Valens shareholders holding approximately 10.6% of such outstanding SNDL shares.

Price Action

SNDL shares were trading 4.19% higher at $2.365 per share at the time of writing Tuesday morning.

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Photo by Tim Foster on Unsplash

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