SNDL will buy the remaining shares (34.8%) of cannabis retailer Nova Cannabis for $40 million making the company the sole owner of the chain.
Zach George, SNDL’s Chief Executive Officer, says, “Today’s announcement by our Alberta-based corporations underscores our commitment to sustainable performance in Canadian cannabis. We are committed to building a consumer-centric model at scale, supported by SNDL’s robust shared service model, access to capital, and a well-developed cannabis retail pipeline. These factors are integral to the achievement of sustained profitable growth.”
Nova’s Shareholders
Nova shareholders can receive either $1.75 in cash or 0.58 of a common share of SNDL for each of their Nova shares, which are on Nasdaq. Those shares are subject to proration and a maximum of 50% of the aggregate consideration payable in SNDL shares.
SNDL and Nova have had an interesting history since SNDL acquired Nova’s previous parent company Alcanna. In April 2023, Nova acquired 31 stores from SNDL including 12 in Alberta, 11 in Ontario, three in British Columbia, three in Saskatchewan, and two in Manitoba. Then in November 2023 SNDL entered into an administrative services agreement with Nova.
Ron Hozjan, an independent director at Nova, says, “The proposed transaction offers liquidity and certainty to minority shareholders while creating a lasting legacy in a nascent industry.”
Benefits to Both Companies
The companies believe that Nova’s retail expertise will support SNDL’s entire cannabis retail portfolio to enhance programming, expand data programs, advance staff training initiatives, and optimize inventory management. They also expect to generate savings through the streamlining of public company expenses and the optimization of general and administrative costs.
The transaction has been approved by the boards of directors of both SNDL and Nova and is expected to close on or before October 18, 2024.
Image courtesy of Nova Cannabis.