As once-cannabis-titan Sundial Growers Inc. (Nasdaq: SNDL) continues its journey of restoring investor confidence, the firm is set to buy Alcanna Inc. (TSX: CLIQ), which owns over 200 stores in Canada’s liquor and cannabis sectors.
Sundial said Thursday it had entered an agreement to acquire all commons shares of Alcanna in a deal valued around $346 million.
Alcanna is Canada’s largest private liquor retailer, with 171 stores primarily in Alberta under its Wine and Beyond, Liquor Depot and Ace Liquor banners. The company also has a 63-per-cent majority stake in Nova Cannabis Inc. (TSX: NOVC), which operates 62 stores across Alberta, Saskatchewan and Ontario under its Value Buds and Nova Cannabis banners.
Sundial says the acquisition will give it improved cash flow from liquor sales, more exposure through Nova Cannabis stores as well as synergies from a larger retail operation.
“This made-in-Alberta transaction allows Sundial to further its mission to own the customer relationship and deliver sustainable value to shareholders,” Sundial CEO Zach George said in a statement.
“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.”
Alcanna CEO James Burns says the deal testifies to the value created by the team at Alcanna, and will be beneficial to its shareholders.
Under the agreement, Alcanna’s shareholders will receive 10.69 common shares of Sundial for each common share of Alcanna held, representing a value of around $9.12 per Alcanna share.
According to the statement, the transaction has been unanimously approved by both companies’ boards of directors, and is expected to close in December or the first quarter of 2022.
In July, Sundial closed another deal to buy pot shop company Inner Spirit for $131 million in cash and stock.
After being a leading pot stock at the advent of Canada’s legal market, Sundial cratered in 2019, losing over 80 per cent of its valuation by the end of the year.
Following resignations of its top management, the firm has since tried to right the ship, cancelling expansion plans and paying off its massive debt pile via selling stock and capital raises.
While Sundial continues to report net quarterly losses — $52.3 million in its latest report — the firm has plenty of liquidity, with $1.2 billion in cash, marketable securities and long-term investments as of Aug. 9.
Company stock was up 5 per cent Friday to US$0.68 on the Nasdaq.