Proactive Investors - SNDL Inc, the largest private sector liquor and cannabis retailer in Canada, revealed that it has completed the previously disclosed acquisition of all the issued and outstanding shares of The Valens Company Inc for around $138 million in SNDL shares and the assumption of Valens' $60 million non-revolving term loan facility.
With approximately $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. SNDL will also have the highest pro forma consolidated net revenue among all Canadian cannabis companies based on the last fiscal quarter of each company on an annualized basis.
The combined company will operate as SNDL Inc, headquartered in Calgary, Alberta, said SNDL.
"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," Zach George, the CEO of SNDL, said in a statement.
"SNDL's existing consumer packaged cannabis business will be transformed by Valens' high-quality extraction, processing, and manufacturing capabilities… 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," George added.
Leadership team
The combined company brings together the talents of both organizations. Frank Krasovec has been appointed to the company’s board effectively from January 17, 2023. The board now consists of six directors.
Krasovec is an entrepreneur with a history of co-founding successful companies in multiple industries. He is currently the CEO of Norwood Investments and the co-founder and chairman of DPC Dash, which owns 600 Domino's Pizza stores in China.
While Zach George will continue to serve as CEO of SNDL, former Valens CEO Tyler Robson will join the leadership team as President of Cannabis, effectively from January 17, 2023.
Andrew Stordeur, SNDL's former president and COO has left the company and SNDL thanked him for his “tireless efforts” in building the group’s commercial infrastructure.
Following the transaction, Valens shareholders received 0.3334 SNDL common shares for each Valens share. That represents an implied value of $1.26 per Valens share, which is roughly a 10% premium. Valens shareholders will own 9.5% of the combined company.
In connection with the transaction, SNDL issued an aggregate of 27.6 million SNDL shares to Valens shareholders as the consideration. Valens shares have been suspended from trading and will be delisted from the tech-dominated Nasdaq.
The acquisition creates a vertically integrated giant in Canada that combined generates over $1 billion dollars in annualized revenue. The combination of a diverse portfolio of brands, a 180 multi-banner cannabis retail store network, premium indoor cultivation, and low-cost manufacturing facilities, pole vaults SNDL into one of the biggest cannabis manufacturers and retailers in Canada. The deal will accelerate SNDL's manufacturing and operational footprint to better address market saturation and oversupply.