The cannabis market is about to get a little more crowded. Calgary, Alberta-based Sundial Growers announced terms on Tuesday for its initial public offering on the Nasdaq, using “SNDL” as its ticker symbol. The company intends to raise US$130 million from the IPO of 10 million shares of its common stock at a midpoint price of US$13.00 per share. Sundial would command a fully diluted market value of US$1.3 billion, according to a report.
The Canadian cannabis producer follows Tilray (NASDAQ:TLRY) to trade on the U.S. exchange without a listing in Canada. The expected IPO pricing date is July 31, 2019.
A look at its operations
Sundial has three main brands that gives it access to both medical and recreational markets:
- Heal: focuses on the medical marijuana segment with these products offered as prescription medicine.
- Help: is still a medical marijuana brand but it is a health and wellness brand that highlights the benefits of using CBD and that doesn’t need to be prescribed by a doctor.
- Play: this is the company’s recreational marijuana brand which offers products for a variety of purposes.
Sundial currently operates five facilities, with two in Alberta, three in the U.K. The company said its adding a sixth location in B.C. which is still under construction. The cannabis producer focus in North America is to offer premium inhalable products, while in the U.K. it aims to produce hemp at high volumes and low costs to enter global markets with cheap CBD products.
How is Sundial different from the rest?
How the company looks to set itself apart is its attention to detail. In order to ensure the quality of its products, the company uses computers to monitor its crops, looking at various factors such as temperature, moisture, soil content, lighting and other variables that will impact the end result.
But Sundial is also focused on customer care, which it focuses on to ensure individuals get the right products for their needs. The company even helps medical marijuana patients complete and submit paperwork to make the process as painless as possible.
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Focused on going global
Earlier this month, Sundial acquired U.K.-based Bridge Farms Group, an agricultural indoor producer of flowers and herbs, to help the company grow its operations across the globe. With 3.5 million square feet of operating space planned by the end of 2021, and a hemp cultivation license, Bridge Farm could add significant capacity for Sundial. Bridge Farm also has established relationships with a cluster of large U.K. and international retailers, Sundial looks to leverage to sell CBD products in the European region.
Sundial CEO Torsten Kuenzlen also hinted more deals could be in the cards for the company:
We recognize that expedient global expansion requires a combination of organic growth and strategic acquisitions. Bridge Farm’s experienced management team, strong market position and operational excellence made it an ideal acquisition
With leading cannabis companies like Aurora Cannabis Inc. (NYSE:ACB)(TSX:ACB) already having a presence in two dozen countries, Sundial is going to have to be more aggressive going forward if it wants to be able to be a big global brand in the industry.
The company has also obtained funding through unsecured convertible notes for $92.6 million as well as a debt facility for a four-year term that will give it $115 million in the first tranche and $44.6 million in the second, which will be available once certain conditions are met.
