Sundial Growers Inc.
Alcanna is Canada’s largest private liquor retailer that has been dealing in retailing regulated products for 25 years. It operates in 171 locations predominantly in Alberta under its three retail brands “Wine and Beyond”, “Liquor Depot” and “Ace Liquor”.
With this deal, the Cash Flow Profile of Sundial will Improve with Expansion into Liquor as Alcanna’s well-established liquor business allows Sundial to enjoy stable cash generation through a longstanding business model with trailing twelve months of free cash flow of $16.4 million on a built-out retail platform.
They also get enhanced exposure with investment in Nova, a Cannabis dealing company. The Combined network of Nova and Sundial can expand in Canada, a cannabis retail market leader having more than 170 locations.
With this deal, Sundial’s Spirit Leaf retail operations are planned to be supplemented by Alcanna’s powerful corporate support function. As per the press release, Synergies and other strategic initiatives may generate more than $15 million in extra EBITDA on an annual run-rate basis as a result of the deal.
The impact of the announcement was registered on the dashboard of Quantale as Sundial Growers’s social engagement amongst the users of Twitter and Reddit, on Thursday, rose almost 733 percent combined with an increase of nearly 3 percent in the trading volume.
On Thursday, the stocks closed 0.65, up 2.13% from their previous day close of $0.63.
Sundial’s stock, today, opened its intraday at a gap up, at $0.74, up to $0.092 % from the previous day’s close of $0.6480.
“This made-in-Alberta transaction allows Sundial to further its mission to own the customer relationship and deliver sustainable value to shareholders,” said Zach George, Chief Executive Officer of Sundial. “Alcanna’s value-focused model in liquor retailing has created market stability and we believe that the replication of this playbook in cannabis has strong potential to drive a similar result. We intend to position all of our retail exposure for profitability and strive to work with Canadian licensed producers to delight consumers with quality cannabis products.”
Alcanna stockholders will hold Sundial common shares in an all-stock transaction and can participate and help in shaping the company’s future. They get complete exposure to Sundial’s core cannabis operations in Canada and investment operations by utilizing capital within the cannabis sector through its joint venture in SunStream Bancorp Inc.
Besides getting a chance to pour in liquidity and expand in the market, Sundial’s balance sheet strength allows Alcanna shareholders to take part in investment growth in the regulated product sector.
“We believe this agreement is a testament to the value created by everyone at Alcanna and will be beneficial to all of our stakeholders,” said James Burns, Vice-Chair and Chief Executive Officer of Alcanna. “We have been successful at achieving customer loyalty, and operating at levels of efficiency that are industry-leading and Sundial will provide great opportunities as a larger and significantly more liquid company. We look forward to working with Sundial to complete this transaction.”
The Transaction Sundial and Alcanna are expected to close in December 2021 or the first quarter of 2022.