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Friday, Jul 1, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


Village Farms buys majority stake in Rose LifeScience for $46.7M

Rose is a third-party supplier for major cannabis companies and micros in Quebec

Village Farms buys majority stake in Rose LifeScience for $46.7M
The transaction includes Rose's licensed 55,000-square-foot facility in Huntingdon, Quebec. Photo via Rose LifeScience

Farming multinational Village Farms International, Inc. (TSX: VFF) (Nasdaq: VFF) is drastically expanding its presence in one of Canada’s largest cannabis markets by acquiring leading East Coast cannabis producer Rose LifeScience.

On Monday, Village Farms said it bought 70 per cent of Quebec-based Rose via a share-purchase deal involving $19.9 million in cash and 2,411,280 common shares for a value of up to $26.8 million.

The transaction totalled around $46.7 million.

The shares issued under the deal are subject to lock-up agreements and compliance with applicable securities laws, where 33 per cent of shares will be released in four months, another 33 per cent in eight months and the remaining shares after one year.

“The acquisition of Rose — by far the most successful Quebec-based cannabis operator in our view — is a prudent and strategic means by which to enter, and rapidly ramp sales, in one of Canada’s largest provincial cannabis markets,” said Village Farms CEO Michael DeGiglio in a statement.

Rose LifeScience is a leading third-party cannabis partner, acting as the sole direct-to-retail sales, marketing and distribution entity for Entourage Health Corp. (TSXV: ENTG) (OTCQX: ETRGF) (FSE: 4WE), Sundial Growers Inc. (Nasdaq: SNDL), Tilray, Inc. (TSX: TLRY) (Nasdaq: TLRY) The Flowr Corporation (CVE: FLWR), as well as 10 micro and craft growers throughout Quebec.

The company also owns Tam Tams, a legal weed brand, processed at its licensed 55,000 square-foot facility in Huntingdon. Rose has a platform for several Quebec-based micro-producers as well, under its DLYS brand.

Village Farms stock climbed 3 per cent Monday to $11.47 on the Toronto Stock Exchange.

“Rose immediately expands our reach to more than 90 per cent of all Canadian retail cannabis sales and represents a major step forward in Pure Sunfarms’ strategy to become the leading national supplier of cannabis in Canada, with at least a 20 per cent market share in the dried flower category,” said Pure Sunfarms CEO Mandesh Dosanjh.

Photo via Village Farms

Rose Co-founders Davide Zaffino and Brian D. Stevenson will remain in their current roles and will keep 30 per cent interest in the company.

Along with the acquisition, Village Farms and management shareholders entered into a deal giving the firm a pathway to acquire the retained interest if certain events happen before Mar. 31, 2025.

“We have long admired the success of Village Farms and Pure Sunfarms in the Canadian cannabis industry. We are proud to join forces with them to accelerate our successes, and seize this opportunity to further evolve the industry in our home province of Québec,” said Rose president Davide Zaffino.

Read more: Profits rising for Pure Sunfarms: Village Farms Q3 report

Read more: Pure Sunfarms posts strong growth, eyes US expansion

“As part of the outstanding family of cannabis businesses within Village Farms, we are even better positioned to continue playing this leading role in the Quebec landscape.”

Village Farms is a veteran vegetable grower, based in B.C., and owner Sun Purefarms. It also owns CBD brand Balanced Health Botanicals in the United States.

The company says it plans to enter the U.S. high-THC market when possible.


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