Jan 18, 2023
SNDL Acquires The Valens Company

SNDL Inc. announced the completion of the previously disclosed acquisition of all of the issued and outstanding common shares of The Valens Company Inc. All financial information  is reported in Canadian dollars unless otherwise indicated.

Key Transaction Highlights

  • Creates a well-positioned vertically integrated entity in Canada that combined generates over a billion dollars in annualized revenue. Through the combination of a diverse portfolio of brands, a 180 multi-banner cannabis retail store network, low-cost biomass sourcing, indoor cultivation and low-cost manufacturing facilities, SNDL will become one of the largest adult-use cannabis manufacturers and retailers in Canada. The transaction is expected to accelerate the optimization and rationalization of SNDL’s manufacturing and operational footprint to better address market saturation and oversupply.
  • Enhances branded product offering with low-cost in-house manufacturing capabilities. By integrating Valens’ product suite into its portfolio, SNDL will increase its overall cannabis market share and its 2.0 product formats market share, becoming a top 10 player in both categories. As a result of Valens’ low-cost platform, SNDL will enhance its product line while offering pricing flexibility to retail partners.
  • Increases optionality on biomass by pairing premium cultivation with low-cost procurement. Combining SNDL’s high-quality cannabis cultivation operations with Valens’ low-cost biomass procurement capabilities will enhance SNDL’s ability to offer a wide range of customized, innovative products to meet customer and consumer desires.
  • Synergies through cost rationalization and operational efficiencies. The combination of SNDL and Valens is expected to deliver more than $10 million of annual cost synergies. Together with incremental revenue from greater distribution of Valens products, it is estimated that the Transaction will deliver upwards of $15 million of additional EBITDA on an annual run-rate basis through synergies and other strategic initiatives. SNDL expects to give updates on these synergies in future quarters.
  • Valens Shareholders to participate in and help create the future of SNDL. Valens Shareholders are to receive SNDL common shares in an all-stock transaction. Beyond improved liquidity and better access to a large retail footprint, SNDL’s balance sheet strength provides a unique opportunity for Valens Shareholders to participate in the creation of a well-positioned vertically integrated Canadian cannabis company.

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

Read the full press release here.