The Valens Company Inc. (TSX:VLNS) (OTCQX:VLNCF) (FRA:7LV) has announced that it has closed its acquisition of US company Green Roads, as well as its manufacturing subsidiary as it expands its business globally.
Valens, a leading manufacturer of cannabis products, will pay US$40 million for Green Roads, plus up to an additional US$20 million in contingent consideration payable upon the purchased business achieving certain profit milestones. If all the milestones are met, the transaction represents around 4.5x 2022 earnings before interest, tax, depreciation, and amortization (EBITDA).
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Following the acquisition, Valens said it has a significant presence in the largest cannabinoid market in the world, representing a big step in its international expansion strategy and furthering its vision of becoming a global manufacturer of cannabis consumer packaged goods. Buying Green Roads gives it direct entry into the US market with a trusted and leading CBD health and wellness brand, an established manufacturing and distribution platform with a global reach, highly experienced leadership team with a strong knowledge of the US consumer landscape. and a proven track record in cannabis consumer packaged goods manufacturing.
Valens said it also strengthened its position in the Canadian market with an expanded offering through the introduction of various CBD products from Green Roads. It expects to launch Green Roads products in the Canadian market in the second half of fiscal 2021.
Valens' entry into the US market is anticipated to open global distribution opportunities, with Green Roads and Valens-manufactured products collectively already sold in over 11 countries in several formats. The company is currently engaged in late-stage discussions regarding various international distribution opportunities in Latin America, Asia-Pacific, and Europe.
"We expect to realize strong synergies and to aggressively pursue various strategic opportunities that are now available to our combined business through this transaction, including expanding the distribution of our ever-growing product offerings overseas and further disrupting the North American market with innovative cannabis products," Valens CEO, co-founder and chair Tyler Robson said in a statement.
"The combination of Valens and Green Roads makes for an unbeatable team, diversified distribution network, and unparalleled product development and manufacturing platform, which we expect will provide us the footprint to become one of the biggest players in the global cannabis health and wellness market."
Valens provides proprietary cannabis processing services across five core technologies, in addition to best-in-class product development, formulation and manufacturing of cannabis consumer packaged goods.
Contact the author: stephen.gunnion@proactiveinvestors.com