The Valens Company (TSX:VLNS, OTCQX:VLNCF) Inc announced it had finalized its acquisition of Citizen Stash Cannabis Corp in an all-stock transaction valued at about C$54.3 million on an enterprise value basis.
Valens told investors in August, when the deal was first announced, that it expects the acquisition to be accretive in 2021 and 2022 before synergies, with a revenue multiple of about 4.3 times first-half fiscal 2021 annualized revenue.
The transaction will provide the company with a strategic, asset-light expansion into the Canadian cannabis flower and pre-rolls market, it added.
READ: The Valens Company to buy premium craft cannabis company Citizen Stash for C$54.3M in stock
"With the completion of this strategic acquisition, Valens is poised to strengthen its position in the recreational market with the ownership of premium cannabis genetics, strains and products," CEO Tyler Robson said in a statement announcing the deal’s close.
"As we enter the premium flower category, Valens now boasts a manufacturing and brands portfolio that focuses on two high growth categories of premium flower and 2.0 products. This is just the first step into the premium cannabis product category and consumers can stay tuned to see how we further leverage Citizen Stash's asset light genetics portfolio to launch new innovative products in the future."
Under the terms of the deal, Citizen Stash shareholders are entitled to 0.1620 of a Valens share for each Citizen Stash common share held. The outstanding in-the-money Citizen Stash options were transferred to Citizen Stash in exchange for the applicable entitlement to the in-the-money amount for such options, payable in Valens shares, net of applicable withholdings.
Each Citizen Stash restricted share unit outstanding immediately prior to completion of the arrangement was fully vested and transferred to Citizen Stash and cancelled in consideration for the issuance by Citizen Stash of a share that entitled the holder to 0.1620 of a Valens share, net of applicable withholdings.
Hillcrest Merchant Partners Inc received 1,519,306 Citizen Stash shares that entitled Hillcrest to 0.1620 of a Valens share per Citizen Stash share.
Valens is a profitable British Columbia-based producer of cannabis products, medical and recreational, and it is scaling up operations. The company can process over 425,000 kilograms of biomass per year and its services include numerous types of proprietary extraction, analytical testing, formulation, cultivation, and research, as well as white label product development.
The company's products include tinctures, two-piece caps, soft gels, oral sprays, and vape pens as well as beverages, edibles, injectables, and natural health products and it has a strong pipeline of next-generation products in development.
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