Valens Closes On Green Roads Acquisition

The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) has closed its previously announced acquisition of  Green Roads and its manufacturing subsidiary. The value of the deal totaled $40 million, plus up to an additional $20 million in contingent consideration, which will be paid when the company hits certain EBITDA milestones. If all the milestones are met in 2022, the transaction represents approximately 4.5x fiscal 2022 EBITDA.

Based in South Florida, Green Roads is the largest privately-owned CBD company in the United States, with a focus on quality from its pharmacist-founded background.  Green Roads says it boasts a leading market share and brand platform in the US CBD industry, with an extensive distribution network consisting of over 7,000 retail stores and a robust e-commerce and marketing platform with over 30,000 five-star reviews across all its product lines. Green Roads is currently one of a small number of US CBD companies that produce their products in their own cGMP facilities, a testament to their dedication to integrity and excellence.

Valens said that over the next year it expects to invest approximately $10 million into the Green Roads business to capitalize on the anticipated growth of the US CBD market, projected to reach roughly $15.9 billion by 2026. The investment in Green Roads is expected to contribute to the further development of its highly successful e-commerce platform, support the expansion of its retail distribution network in the US, and increase the brand’s sales and marketing resources to drive market leadership in the health and wellness vertical.

“With the closing of this Acquisition, Valens now has a significant presence in the largest cannabinoid market in the world, representing a monumental step in our international expansion strategy and furthering our vision of becoming a global manufacturer of cannabis consumer packaged goods,” said Tyler Robson, Chief Executive Officer, Co-Founder and Chair of The Valens Company. “We expect to realize strong synergies and to aggressively pursue various strategic opportunities that are now available to our combined business through this transaction, including expanding the distribution of our ever-growing product offerings overseas and further disrupting the North American market with innovative cannabis products. The combination of Valens and Green Roads makes for an unbeatable team, diversified distribution network, and unparalleled product development and manufacturing platform, which we expect will provide us the footprint to become one of the biggest players in the global cannabis health and wellness market. Stay tuned for updates on anticipated synergies as we move forward as a stronger, combined company.”

The company’s strategy for buying Green Roads included a direct entry into the US market with a company that had an established manufacturing and distribution platform with a global reach, highly experienced leadership team with a strong knowledge of the US consumer landscape, and a proven track record in cannabis consumer packaged goods manufacturing. It will also strengthen its position in the Canadian market with an expanded offering through the introduction of various CBD products from Green Roads. Valens expects to launch Green Roads products in the Canadian market in the second half of fiscal 2021. Beyond Canada and the U.S., Valens is currently engaged in late-stage discussions regarding various international distribution opportunities in Latin AmericaAsia-Pacific, and Europe.

Dale Baker, President & Chief Operating Officer of Green Roads, said, “The combination of Green Roads and Valens creates a truly global company with a clear leadership position both within the US CBD market and Canada’s domestic cannabis market. With this larger platform, we look forward to launching Green Roads products in Canada in the second half of 2021 and leveraging our own manufacturing facilities to export CBD products internationally. Valens and Greens Roads have a shared ethos of keeping our customers at the heart of our strategic decision-making and offer complementary products that foster brand loyalty and drive high margins. With our enhanced platform, we look forward to accelerating our global expansion plans and bringing our growing portfolio of products to an even broader customer base.”

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