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Valens Company Announces $24.9 Million Acquisition, $35 Million Bought Deal

The Valens Company (TSX: VLNS) this morning expanded its cannabis 2.0 product offerings with the announcement of the acquisition of LYF Food Technologies. The company is primarily an edibles producer, while focusing on white label manufacturing and infusion.

The company listed a number of strategic highlights in connection with the acquisition, with the company having an experienced management team from commercial food manufacturing, while the facility is reportedly nearby to Valen’s operations in Kelowna. The company also reportedly has 100 formulations, though no brands are mentioned within the release.

The transaction is expected to be accretive to both anticipated EBITDA as well as earnings per share in the current fiscal year, with the company also highlighting the earnout structure as a highlight of the transaction. If all milestones are met, the company will reportedly be achieving a 4.2x multiple on the final milestone.

The transaction will see Valens pay $24.9 million on closing. Payment is to be made via the issuance of $22.0 million in common shares of the issuer as well as the assumption of a $2.9 million mortgage on LYF’s property. Up to $5.0 million of the value in common shares is payable in cash. The company currently anticipates a total of 9.8 million shares to be issued in connection with the offering, of which just under 1.0 million will be placed into escrow. A further $2.9 million, or roughly 1.3 million shares, will be paid under certain earnout arrangements.

The company also separately this morning announced a $35.0 million bought deal placement lead by ATB Capital Markets, which includes an over-allotment option. The financing will see units of the company sold at a price of $2.05 per each, with each unit consisting of one common share and one half of a common share purchase warrant.

Each warrant is valid for a period of three years from the date of issuance and contains an exercise price of $2.55 per share.

Net proceeds from the financing are to be used to fund a portion of the LYF transaction as well as other strategic M&A and expansion opportunities. Funds are also to be used for the standard working capital and general corporate purposes.

The financing is expected to close by January 29, 2021. The acquisition of LYF meanwhile is anticipated to close by February 18, 2021.

The Valens Company last traded at $2.28 on the TSX.


Information for this briefing was found via Sedar and The Valens Company. 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.

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