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Sundial Growers to Acquire Alcanna for $346M; Shares Jump 16.7%

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Canada-based cannabis producer Sundial Growers (SNDL) has signed an agreement to acquire Canadian liquor retailer Alcanna Inc. (TSE:CLIQ) for approximately $346 million. Following the announcement, Sundial’s shares soared 16.7% in extended trade on Thursday to close at $0.76.

Alcanna operates 171 locations primarily in Alberta under its brands Ace Liquor, Liquor Depot and Wine and Beyond.

As per the agreement, for each common share, Alcanna shareholders will receive 10.69 common shares of Sundial based on the trailing 10-day volume-weighted average price. (See Sundial stock chart on TipRanks)

The CEO of Sundial, Zach George, said, “Alcanna’s value-focused model in liquor retailing has created market stability and we believe that the replication of this playbook in cannabis has strong potential to drive a similar result.”

The acquisition, which is expected to close in December 2021 or in the first quarter of 2022, is likely to generate more than $15 million of additional EBITDA per year for Sundial through synergies and other strategic initiatives.

Two months ago, Canaccord Genuity analyst Shaan Mir maintained a Hold rating on the stock with a price target of $0.7 (8% upside potential). The analyst expects the company to report a loss of $0.09 per share in the third quarter.

Overall, the stock has a Hold consensus rating based on 1 Hold. The average Sundial Growers price target of $0.70 implies 8% upside potential. Shares have gained 194.6% over the past year.

According to TipRanks’ Smart Score rating system, Sundial scores a 5 out of 10, suggesting that the stock is likely to perform in line with market averages.

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