SNDL to acquire The Valens Company under proposed deal
Published on August 22, 2022 by David Wylie
The Valens Company will be gobbled up by SNDL if a merger-acquisition goes forward.
Under the proposed deal, Calgary-based SNDL will acquire all of the issued and outstanding common shares of Kelowna-based The Valens Company in an all-stock transaction valued at $138 million.
Valens shareholders would receive 0.3334 of a common share of SNDL for every Valens share they own at a value of $1.26 per Valens share.
Valens’ stock has tumbled significantly in the past year. Shares traded at $12 apiece in May 2021 but are now down to just over $1. Valens has been borrowing money and cutting costs by slashing its workforce.
• RELATED: Q&A with The Valens Company president
The transaction is expected to close in January.
SNDL owns a number of liquor and cannabis retail chains, including Spiritleaf, Value Buds, and Liquor Depot. It also has cannabis brands Top Leaf, Sundial, Palmetto and Grasslands in its portfolio.
Meanwhile, Valens owns Citizen Stash, Green Roads, Lyf Edibles, and Versus.
Valens CEO Tyler Robson said he was “thrilled” with the deal. One industry insider said that according to his call with a member of the Valens’ executive that the plan is for Robson to run the cannabis operations at SNDL.
Valens’ shareholders will vote on the offer by the end of November.
SNDL CEO Zach George said merging the two companies, which have been commercial partners since legalization, would create “a dominant vertically integrated company, exceptionally well-suited to weather the current cannabis environment and become a leader in the Canadian regulated products sector.”
“SNDL’s existing consumer packaged cannabis business will be transformed by Valens’ high-quality extraction, processing, and manufacturing capabilities and aligns well with our strategic vision to delight consumers with a full range of quality cannabis products and experiences,” said George.
“I am excited by the strong cultural fit between our teams and humbled by the opportunity to work with Valens’ passionate and innovative leadership.”
If social media reaction is any indicator, investors and watchers of The Valens Company are underwhelmed at their return on investment.
“I can’t believe the amount of money raised over the years, overpriced acquisitions, etc.,” wrote one member of The Valens Company Investors Group on Facebook. “CEO and board of directors make out with their millions, shareholders after dilution and share price destruction… nothing.”
Twitter deteriorated into personal attacks against Robson in his announcement of the deal.