Sundial Growers Inc. (SNDL) gained Friday after the company announced plans to acquire Alcanna for total consideration of approximately $346 million.
Alcanna (TSX:CLIQ, OTC:LQSIF) is one of Canada’s largest liquor retailers, operating 171 locations predominantly in Alberta under its three retail brands “Wine and Beyond”, “Liquor Depot” and “Ace Liquor” Sundial said it is estimated that the transaction will deliver more than $15 million of additional EBITDA on an annual run-rate basis through synergies and other strategic initiatives.
In addition to that, Alcanna’s strategic partner, who owns roughly 63% of the company, Nova Cannabis Inc. (TSX: NOVC), is one of Canada’s largest cannabis retailers offering a wide range of high-quality cannabis products at value prices. Nova currently operates 62 stores across Alberta, Saskatchewan and Ontario primarily under the “Value Buds” and “Nova Cannabis” banners.
“This made-in-Alberta transaction allows Sundial to further its mission to own the customer relationship and deliver sustainable value to shareholders,” said Sundial CEO Zach George, “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 in order to delight consumers with quality cannabis products.”
Part of the desire to buy Alcanna was the company’s stable cash generation that provides trailing twelve months of free cash flow of $16.4 million on a built-out retail platform. Another reason to buy Alcanna was the Nova store count.
SNDL shares increased in price seven cents, or 10.2%, to 71 cents.