On Thursday, analyst Pablo Zuanic out Cantor Fitzgerald offered an industry update on four recent M&A deals and Glasshouse Series B issuance of preferred stock.
highlights
- Zuanic said the deal between Curaleaf Holdings Inc. CRBLF and Four20 Pharma stands out from the rest because it could have the greatest long-term strategic implications, “particularly if Curaleaf International seeks a listing on NASDAQ (in the event US MSOs do not have line of sight to a listing of their own).”
- With reference to SNDL SNDL Buy Valens VLNS, Zuanic said the deal will help the company develop its Canadian recreational moat, more than doubling its recreational stake and significantly expanding its derivatives business. “It will be about making Valens profitable,” he clarified.
- He also praised Aurora Cannabis ACB Purchase of 50.1% of Bevo Farms (a propagator), calling the move “the best way for the company to create value for the closure of Sky’s facility.”
- With reference to TerraAscend TRSSF Zuanic expanded its retail presence in Michigan, noting that the move “goes against the grain for an MSO, (…) in a growing but challenging market.” He also noted that the company’s Michigan retail network “performs above average in terms of sales per store.”
- Beyond M&As, Zuanic checked the Glasshouse Series B issuance of preferred stock (dividends of 25% by year 4 plus warrants with strike prices 2x above market price) versus the Pharmacielo bonds (11% coupon; warrants with strike prices 3.4x above current market price).
SNDL is expanding its presence in the Rec market
SNDL continues to expand its Canadian moat Buy Valens. On 8/22/22, Sundial Growers, also known as SNDL, announced that it would acquire The Valens Company in an all-stock deal (0.3334 SDNL shares issued for each Valens share at closing), resulting in At the time of the announcement, the case was worth CAD$138 million (SNDL already owned 6.2 million shares of VLNS for a 7.8% stake), for a 10% premium on the 30-day…
