The Valens Company (TSX:VLNS, OTCQX:VLNCF) Inc investors have the opportunity to continue participating in the company’s story following the announcement that the cannabis producer is being acquired by private liquor and cannabis retailer SNDL Inc in a $138 million all-share deal, according to analysts at Stifel GMP.
In a note, analysts awarded the stock a ‘Buy’ rating but lowered their price target from C$3.50 to C$1.20 to reflect the takeover offer.
The company’s Toronto-listed stock is currently trading at about C$1.07.
READ: The Valens Company acquired by Canada's largest private sector liquor and cannabis retailer SNDL in $138M stock deal
Stifel analysts wrote that SNDL’s offer of $1.26 per share was materially below its previous target, but they believed it remained an attractive risk-adjusted opportunity for Valens shareholders, recommending that Valens shareholders should tender their shares and approve the transaction.
“A key reason why we like the deal is the ability for shareholders to continue participating in the VLNS story, but in a proforma entity that does not suffer from solvency or financing risk and has more resources to better execute on the growth path,” analysts wrote.
“Our positive stance on VLNS is supported by 1) VLNS having exposure to the entire Canadian cannabis market, US hemp-derived CBD market and international opportunities; 2) its flexibility to produce every product format available, thereby maximizing its utility to brand partners/LPs; and 3) current valuation levels being too pessimistic, with shares trading below tangible book value, offering investors an attractive risk-reward opportunity.”
The Valens Company (TSX:VLNS, OTCQX:VLNCF) is a leading manufacturer of cannabis derivative products with a mission to bring the benefits of cannabis to the world.
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