SNDL Inc (NASDAQ: SNDL) this morning indicated it is digging in further to the recreational cannabis market in Canada with the purchase of the remainder of Nova Cannabis (TSX: NOVC).
The cannabis giant has agreed to acquire the remaining 34.8% of the cannabis retailer that it doesn’t yet own for roughly $40 million. Under the terms of the arrangement shareholders of Nova will receive $1.75 per share in the form of cash for each share held, which amounts to a 41.2% premium to the 20 day volume weighted average price of Nova.
Alternatively, shareholders can elect to receive 0.58 of a common share of SNDL for each share held of Nova in lieu of cash, which is subject to proration, with a maximum of 50% of consideration of the entire transaction to be paid in the form of shares.
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“Today’s announcement by our Alberta-based corporations underscores our commitment to sustainable performance in Canadian cannabis. We are committed to building a consumer-centric model at scale, supported by SNDL’s robust shared service model, access to capital, and a well-developed cannabis retail pipeline,” commented Zach George, CEO of SNDL, on the transaction.
The acquisition of the cannabis retailer is expected to support the entire cannabis retail portfolio that has been assembled by SNDL by optimizing inventory management, expanding data programs, and enhance programming. The purchase is also expected to generate savings through streamlining of expenses associated with being a public company, and the optimization of general and administrative costs.
The transaction remains subject to shareholder approval, with a special meeting to approve the transaction slated to occur in early October, with the transaction expected to close by October 18.
SNDL last traded at $2.01 on the Nasdaq.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
