Giving purchase offer for retailer a revise
A counterpart to the LCBO, Alcanna is a Western Canada alcohol retailer based in Edmonton, Alta. It is also a majority shareholder of Nova Cannabis, a marijuana retailer with stores across Alberta, Saskatchewan and Ontario.
In an Oct. 7 news release, Sundial Growers, a Calgary-based marijuana producer and marketer, announced it will acquire Alcanna for total consideration of roughly $346 million. Alcanna shareholders will receive 10.69 common shares of Sundial per share of Alcanna.
This offer was revised on Jan. 6 to include cash and shares. Alcanna shareholders will now receive $1.50 in cash and 8.85 shares of Sundial per share of Alcanna. Shareholders approved the arrangement the following day.
Bottomley notes there are two major trends in the marijuana industry: a shift in consumer preferences and a shift in investor expectations.
“From a consumer perspective, their tastes are not significantly changing year over year, but the one thing up for debate is beverages. I think there is a place for it in the sector, but the logistics are harder,” he said, adding that government restrictions on marijuana content limit the amount people can buy, and having the beverages safeguarded in dispensaries make them less convenient to buy.
As for the shift in investor expectations, Bottomley said, “the EBITDA line and free cash flow from operations line are probably what is most looked at now when it comes to licensed producers. We have already seen with Tilray that their market share has gone down, but that is not necessarily bad, as they are protecting their profitability profile by giving up market share of less profitable items.”