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Sunday, Oct 1, 2023
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


SNDL completes acquisition of The Valens Company

The transaction totalled $138 million in shares and assumption of Valens’ $60 million non-revolving term loan facility

SNDL's yearly revenue skyrockets to $712.2M, marking a record-breaking 1170% surge
Photo via SNDL Inc.

SNDL Inc. (Nasdaq: SNDL) has finished acquiring the cannabis concentrate company The Valens Company Inc. (TSX: VLNS) (Nasdaq: VLNS) for approximately $138 million in shares and assumption of Valens’ $60 million non-revolving term loan facility.

On Tuesday, the company announced the completion of the all-stock transaction that marks the creation of a vertically integrated firm making a 180 multi-banner cannabis retail store network with low-cost biomass sourcing, premium indoor cultivation and low-cost manufacturing facilities.

According to the company, the integration of Valens means that SNDL will increase its overall cannabis market share to 3.8 per cent from 1 per cent standalone. It also expects that its 2.0 product formats market share will also increase to 4.4 per cent from 0.1 per cent standalone.

SNDL explained that combining its cultivation operations with Valens’ biomass low-cost sourcing will enhance SNDL’s ability to offer a wider range of products.

The company expects to deliver over $10 million of annual cost synergies. The transaction is estimated to deliver upwards of $15 million of additional EBITDA on an annual run-rate basis through synergies and other initiatives.

SNDL stock went up by 3.3 per cent on Tuesday to $2.34 on the Nasdaq stock exchange.

Read more: Valens Company receives court approval for SNDL deal

Read more: Sundial completes acquisition of Zenabis Business

“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,” said SNDL CEO Zach George.

George explained that 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,” he added.

“With the close of this transaction, we will focus on integrating our assets and teams while delivering both cost synergies and incremental revenue from the greater distribution of Valens products.”

Read more: Valens Q3 revenue dips 15% to $20.3M

Read more: Valens partners with distributor Coldhaus to accelerate growth in key markets

SNDL appoints a new board of directors member

The company also announced it is appointing Frank Krasovec as a new member of the board of directors effective immediately.

Frank Krasovec has a history of co-founding companies in multiple industries, including venture capital, media and telecommunications, among others. Krasovec is currently the CEO of Norwood Investments and is also co-founder and Chairman of DPC Dash which owns and operates approximately 600 Domino’s Pizza stores in China. DPC Dash has plans to list on the Hong Kong Exchange in 2023.

Zach George will continue to serve as Chief Executive Officer of SNDL and Tyler Robson, the former CEO of Valens, will join the leadership team as President of Cannabis.

“I am excited by the strong cultural fit between our teams and humbled by the opportunity to work alongside our new colleagues and leadership team,” added George.

“I want to thank and congratulate everyone at SNDL and Valens for their dedication and hard work in bringing this transaction to a successful conclusion. This is another significant milestone for our company, and we are determined to seize the opportunity to create value for our stakeholders and delight consumers,” George said.


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