On Tuesday, SNDL (NASDAQ: SNDL) stock saw a brief surge of 5%, but ultimately ended the day with a 1% decline. The initial excitement was likely related to SNDL’s recent acquisition of The Valens Company (NASDAQ: VLNS). In August, SNDL agreed to purchase Valens in an all-stock deal valued at approximately CAD 138 million ($102 million). The deal will allow SNDL to maintain a clean balance sheet, with the combined business boasting CAD 314 million ($231 million) in net cash and no debt.
SNDL’s Acquisition Strategy
SNDL is not the only Canadian pot company pursuing growth through acquisitions. The company has previously made notable acquisitions, such as the purchase of Zenabis, a struggling peer that filed for creditor protection in early 2022.
Although the SNDL/Valens deal received approval from the Ontario Superior Court of Justice, it is not yet fully closed. Valens has noted that it is subject to “certain other customary closing conditions,” but these are unlikely to prevent SNDL’s acquisition from moving forward.
Impact of US Politics
Despite the positive development of the court’s approval, investor enthusiasm may have been dampened by news of a Republican majority in the new US House of Representatives. The Republican party has generally opposed marijuana legalization efforts.