CALGARY, AB - SNDL Inc. (NASDAQ:SNDL), a Canadian cannabis retailer, through its joint venture SunStream Bancorp Inc., has announced plans for its SunStream USA group to acquire equity positions in U.S. cannabis assets. This move follows a review by Nasdaq, confirming SNDL's compliance with listing rules.
SunStream USA I, LLC and SunStream USA II, LLC, part of the SunStream USA Group, are expected to soon hold majority equity positions in select cannabis assets, including those of Surterra Holdings, Inc. and Greenpeak Industries Inc. These acquisitions are contingent upon meeting certain closing conditions and milestones.
The SunStream USA Group's structure allows SNDL to gain an indirect interest in U.S. cannabis assets, convertible upon federal legalization. SNDL's affiliate, SunStream Opportunities II LP, will own non-voting and non-participating exchangeable securities in the SunStream USA entities, providing SNDL with economic interests in these assets.
SNDL CEO Zach George highlighted the opportunity for SNDL to restructure non-performing credit investments, enhancing the company's potential returns from U.S. cannabis markets. He emphasized the strategic benefits, including access to capital and increased acquisition and divestiture options.
SunStream USA's anticipated acquisitions, subject to successful closing and milestones, would position it among the top 10 multi-state operators (MSOs) in the U.S. based on pro forma Q1 2024 revenue. The transactions would extend its reach to over 60 million consumers across five states, with combined market sales of $5 billion.
Legal advisors for the transactions include Dentons US LLP and DLA Piper, focusing on regulatory and listing matters, and transactional legal counsel, respectively.
This announcement is based on a press release statement.
InvestingPro Insights
In light of SNDL Inc.'s strategic moves to acquire equity positions in U.S. cannabis assets, a look at the company's financial metrics and market performance provides additional context for investors. According to real-time data from InvestingPro, SNDL boasts a market capitalization of $581.42 million. The company's revenue growth is notable, with the last twelve months as of Q4 2023 showing an increase of 27.63%, indicating a robust expansion in its operations.
Investors tracking SNDL's stock price will find that the company has experienced a significant return over the last week, with a 13.85% price total return. Moreover, the stock has seen a strong return over the last three months, with a 63.24% price total return. This momentum could be a positive sign for investors looking for growth opportunities in the cannabis sector.
Despite the company's growth in revenue, SNDL is trading at a low revenue valuation multiple, with a Price/Book ratio of 0.66 as of the last twelve months of Q4 2023. This could indicate that the stock is undervalued relative to its assets, presenting a potential entry point for value investors.
For those interested in a deeper analysis, InvestingPro offers additional insights into SNDL's financial health and market prospects. There are 10 more InvestingPro Tips available, which include expectations of net income growth this year and an analysis of the company's debt levels. Investors can access these tips and more detailed metrics at InvestingPro, and by using the coupon code PRONEWS24, they can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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