SNDL completes acquisition of The Valens Company

CALGARY — SNDL Inc., completion the previously disclosed acquisition of all of the issued and outstanding common shares of The Valens Company Inc., other than those held by SNDL and its subsidiaries, pursuant to a plan of arrangement under the Canada Business Corporations Act, for total consideration of approximately $138 million consisting of common shares of SNDL and assumption of Valens’ $60 million non-revolving term loan facility.

With approximately $262.5 million in net cash and no debt, SNDL will have the highest pro forma consolidated net revenue among all Canadian cannabis companies based on the last fiscal quarter of each company on an annualized basis. The combined company will operate as SNDL Inc., headquartered in Calgary, Alberta.

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, premium 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 to 3.8 per cent from 1.0 per cent standalone and its 2.0 product formats market share to 4.4 per cent from 0.1 per cent standalone, becoming a top 10 player in both categories.
• Increases optionality on biomass by pairing premium cultivation with low-cost procurement: Combining SNDL’s cannabis cultivation operations with Valens’ low-cost biomass procurement capabilities will enhance SNDL’s ability to offer a range of customized 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, CEO, 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.”