22 Aug 2022
Cannabis producers SNDL, Valens to merge in a $138-million deal
SNDL Inc. and The Valens Company Inc. announced an agreement to merge their businesses, forging a leading vertically integrated cannabis entity. SNDL agreed to acquire all outstanding common shares of Valens for a deal approximated at $138 million CAD. Based on SNDL's share closing price on August 19, 2022, each Valens Share was valued at $1.26, a 10% premium according to the 30-day VWAP of the Valens Shares on the TSX as of that date.
The merged company will encompass 555,500 square feet of cultivation and manufacturing space, 185 cannabis stores, and will have around $314 million in net cash with no debt. SNDL will also achieve the highest pro forma Canadian cannabis revenue on a last fiscal quarter annualized basis. Valens shareholders will possess roughly 9.5% of the combined company, which will operate under the SNDL Inc. name.
The merger is projected to yield over $10 million in annual cost synergies and approximately $15 million additional EBITDA annually. The transaction is expected to conclude in January 2023, contingent on customary closing conditions and shareholder approvals.
Zach George, SNDL's CEO, emphasized the merger's potential for market dominance, while Tyler Robson, CEO of Valens, highlighted the combined strengths of both entities.
Legal advisors for the deal included McCarthy Tétrault LLP for SNDL and Stikeman Elliott LLP for Valens.
