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SNDL Inc. (NASDAQ:SNDL) and Nova Cannabis Inc. (TSX:NOVC) announced on Tuesday that they have entered into an arrangement agreement under which SNDL will acquire all of the issued and outstanding common shares in the capital of Nova not already owned by SNDL, representing roughly 34.8% of Nova shares, for approximately CA$40 million ($29.1 million).
“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," SNDL CEO Zach George said. "These factors are integral to the achievement of sustained profitable growth.”
Under the terms of the agreement, Nova’s shareholders will receive $1.75 in cash for each Nova share, representing a premium of 41.2% to the 20-day VWAP of Nova Shares on the Toronto Stock Exchange (TSX) as of market close on Aug. 12, 2024.
Nova shareholders also can elect to receive, instead of the cash consideration, 0.58 of a common share of SNDL for each Nova share, subject to proration and a maximum of 50% of the aggregate consideration being payable in SNDL shares.
The transaction has been approved by the boards of directors of both SNDL and Nova.
Read Also: SNDL And Nova Cannabis Further Extend Outside Date For Closing Of The Strategic Partnership
Nova’s retail expertise will support SNDL’s cannabis retail portfolio to boost programming, expand data programs, advance staff training initiatives and optimize inventory management.
Moreover, the Calgary, Alberta-based company said the deal is expected to generate savings through the streamlining of public company expenses and the optimization of general and administrative costs.
In addition, SNDL’s robust balance sheet would allow Nova’s retail platform to continue to be supported in a competitive and challenging environment.
“The proposed Transaction offers liquidity and certainty to minority shareholders while creating a lasting retail legacy in a nascent industry,” Ron Hozjan, one of Nova’s independent directors and chair of the special committee of Nova, said. “I commend the Nova team and board of directors for their dedication and leadership.”
The deal is expected to close on or before Oct. 18, 2024.
Following the closing of the transaction, the Nova shares are expected to be delisted from the TSX and Nova will apply to cease to be a reporting issuer in all provinces and territories of Canada.
SNDL's shares traded 4.98% higher at $2.11 per share early Tuesday afternoon.
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