Valens Buys LYF Food Technologies
The newest actor in the cannabis industry’s recent mergers & acquisitions era, The Valens Company (Valens), announced on Monday its intent to purchase LYF Food Technologies (LYF), a premier edibles manufacturer based in Kelowna, BC. The transaction, pending approval from the appropriate bodies, will be completed for $24.9 million, plus $17.5 million extra if certain milestones are met.
The acquisition is an upfront purchase, meaning that Valens now wholly owns LYF and all of its $10 million worth of resources, including its experienced team, 100 plus already-formulated recipes, 10,500 sq. ft. of production facility, and a $2.9 million mortgage. If everything goes according to plan, Valens expects four times the EBITDA they had previously reported.
This is a good move for Valens on many fronts. As trends are showing, edibles and extracts are one of the fastest-growing categories in the cannabis market and are expected to make up around 10% of all products purchased. By acquiring LYF, Valens combines its expertise in low-cost active ingredients with LYF’s skills in creating new products and positions itself to grow substantially in the category.
“LYF stood out for its product innovation and marketing teams, as well as its broad range of edible products, which will introduce new formats to Canadian consumers that are typically only available in more mature markets,” said Tyler Robson, CEO and Chair of the Board of The Valens Company in a press release. “We look forward to further developing our product offering to reach more consumers with high-quality and unique cannabis edibles as this product segment continues to gain in popularity.”
LYF’s experienced staff has a background in commercial-scale food manufacturing as well as cannabis processing and extensive knowledge of research and development and bringing new, innovative cannabis-derived products to market. Between this and the company’s already established brand reputation and relationships, these new products will be able to get to the market quickly. Valens already boasts over 77,000 sq. ft. of licensed manufacturing space at their Valens K1 and K2 facilities, conveniently located only minutes away from LYF’s production facility. The company plans to combine both party’s industry-leading technology to produce new product formats like real fruit gummies, peanut butter cups, hard candies, granola bars, and caramel-filled chocolate bars, as well as other baked goods and sweet treats, all of which will be precisely dosed and highly customizable with vegan, sugar-free, low-sugar, and natural ingredient options.
“Our team could not be more thrilled to join forces with The Valens Company and collectively fuel our shared passion for producing exceptional cannabis products with consumers top of mind,” said Paolo Pero and Matthew Amado, Founders of LYF. “As a fellow Kelowna-based company, Valens’ vision for global growth resonated with the team and ultimately led us to recognize the significant value in combining what we have each uniquely created to bring a new level of manufacturing excellence to Canada and beyond.”
The transaction is set to go through by February 18, 2021.