SNDL (Nasdaq: SNDL) and Nova Cannabis Inc. (OTC: NVACF) announced they have mutually agreed to terminate their strategic partnership agreement, ending a year-long quest to fuse the Canadian operators.
Despite canning the deal, which was initially announced in December 2022, the companies reaffirmed their commitment to an ongoing partnership under a separate management and administrative services agreement.
“We are dedicated to building a consumer-centric, regulated products business model within a complex regulatory environment,” SNDL CEO Zach George said in a statement.
“The synergy between our companies has already demonstrated great results, and combined efforts and shared vision are key drivers in this journey towards market leadership. SNDL remains committed to being a strong financial partner to Nova, with a focus on fostering sustainable business growth and development.”
As a result, the plan to distribute Nova common shares to SNDL shareholders is dead. Additionally, the maturity date of Nova’s $15 million loan with SNDL has been extended to March 31, 2024.
The two became tethered in March 2022 when SNDL, through its financing joint venture, SunStream Bancorp, spent C$320 million to snap up Nova’s majority shareholder, Alcanna. Then-Nova CEO touted SNDL’s ability to provide infrastructure and financial resources to its value-based model to drive scale and expansion.
By December, SNDL said that formally tying the knot would create a “well-capitalized cannabis retail platform in Canada under a vertical integration model with SNDL’s upstream capabilities.”
The marriage proposal intended to allow the two to further share resources and broaden each other’s bases in a post-pandemic, consolidating Canadian sector — with SNDL since then grabbing around 63% of Nova’s shares.
The sacking means that Nova now has to pay back the $15 million loan to SNDL, which according to company filings, was supposed to be eliminated without repayment following the close. How the two’s financing arrangements will play out from here remains to be seen.