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Honorable Member
Joined: 2 years ago
Posts: 248
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Sundial Growers to acquire The Valens Company (VLNS) for implied value of $1.26/share (VLNS remains halted)
9:31 AM ET 8/22/22 |

The two parties announced that they have entered into an arrangement agreement to combine their businesses and create a leading vertically integrated cannabis platform. Pursuant to the terms of the Agreement, SNDL will acquire all of the issued and outstanding common shares of Valens, other than those owned by SNDL and its subsidiaries, by way of a statutory plan of arrangement. All financial information in this press release is reported in Canadian dollars unless otherwise indicated.Under the terms of the Agreement, Valens' shareholders will receive, for each Valens Share, 0.3334 of a common share of SNDL.Based on the August 19, 2022 close of the SNDL shares on the Nasdaq Capital Market exchange, the consideration represents an implied value of $1.26 per Valens Share, for total consideration of approximately $138 million.The Implied Offer Price represents a premium of 10% based on a trailing 30-day volume-weighted average price of the Valens Shares, on the Toronto Stock Exchange up to August 19, 2022.

Noble Member Admin
Joined: 3 years ago
Posts: 1361

Sundial is acquiring The Valens Company. This is something that has been in the works for well over a year.  I have mentioned this a few times.  Now that it is happening, I wanted to comment on this in total.

First, the Alcana deal just closed and we got a good look at what is going on with Sundial post-acquisition with the numbers.  Revenues jumped significantly for Sundial from the inclusion of the revenue from the liquor stores.  But, EBITDA/Revenue came in at a mere 0.2%.  This is paltry.  The thing to remember about these liquor stores is that they are all fairly mature.  And, liquor sales are not moving higher and higher.  In fact, alcohol companies are looking to grow their revenue growth by acquiring cannabis companies.  

And, similarly, Valens is short on profits.  Looking at the numbers, EBTIDA/Revenue for Valens is -140% for Q2.  This is a long way away from profitability.  Also, Valens focuses on White Label production. This can be profitable.  But, in Canada there are many companies doing this; it is competitive.  Margins are low, as witnessed by the -140% EBTIDA/Revenue off of the $19M revenue in the quarter.  The bigger profits are in the 'premium' mark-up that suppliers are selling direct to consumer.  Valens does not get that premium by producing the White Label products.  

Sundial has now taken on two companies that are a long way away from profitability.  I still want to see what will happen with regard to the liquor store purchase if there may be better margins there.  But, for now, looking at the chart above, it does not look as if the stock market is in love with the deal either.  


New Member
Joined: 1 year ago
Posts: 1


Really curious why all these cannabis companies try to buy into the booze game.  Why not just buy convenience stores you get all the package goods and sin products to balance out offering with exposure to energy….

Seems to be a better question of who are the best operators in the cannabis industry?  Who has the best track record of team building and prior success.  This would mean network of contacts on wall street and deeper pocketed partnerships.  Personally you sold me on TLRY and I am a fan on Cronos because of all that Altria exposure to BUD and the highest margin stuff behind the 7/11 counter.  Someone all ways has that shit in the bag walking out of the store.

Noble Member Admin
Joined: 3 years ago
Posts: 1361

@Daryl Fire & Flower up in Canada is owned by the people who own Circle K up there.  They are taking advantage of the convenience store methodology; proving your theory.  

There is no growth in alcohol.  And, margins keep getting thinner and thinner.  Neither of these deals make much sense to me for Sundial SNDL Stock.  


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