The Valens Company Inc. has entered into a definitive agreement to acquire all of the issued and outstanding shares of Green Roads and its majority owned manufacturing subsidiary in a cash and share transaction for $40 million at closing, plus up to an additional $20 million in contingent consideration payable upon the business achieving certain EBITDA milestones.
With the acquisition of Green Roads, The Valens Company, Kelowna, BC, Canada, strengthens its capabilities to supply U.S. domestic and global markets with expanded product offerings. Additionally, the acquisition provides immediate entry into the U.S. market with a trusted and leading CBD health and wellness brand and an established manufacturing and distribution platform.
Green Roads has a focus on quality stemming from its pharmacist-founded background. Based in South Florida, the company produces an award-winning lineup of health and wellness products using hemp-derived CBD across a variety of consumer categories such as oils, topicals, ingestibles, personal care and pet products. Additionally, Green Roads provides B2B manufacturing services for a variety of partners.
Green Roads boasts a distribution network consisting of more than 7,000 retail stores and a robust e-commerce and marketing platform with over 30,000 five-star reviews across all its product lines. Similar to The Valens Company, Green Roads holds a deep commitment to quality control and consumer transparency, producing pharmacist-driven proprietary formulations.
"After analyzing over a hundred companies across the U.S. CBD market, we clearly recognized the value in the Green Roads platform with its best-selling brand,” said Valens co-founder and CEO Tyler Robson. “Our complementary businesses, culturally aligned teams and shared 'it's personal' mission to provide consumers with high quality, innovative cannabis products led to an undeniable combination that we believe will disrupt the industry. The acquisition of Green Roads represents only the first step in our U.S. expansion strategy as we expect to continue to unlock complementary, revenue-generating opportunities while we forge our presence and build our reputation in the world's largest cannabinoid market. Together, The Valens Company and Green Roads make a formidable team, and the combined entity will be primed for significant growth as the global market develops."
The Green Roads Acquisition is expected to provide numerous strategic and financial benefits that will further The Valens Company's goal of becoming a leading global manufacturer of cannabis consumer packaged goods, including:
- Access to the largest cannabinoid market in the world, with immediate entry into the U.S. CBD market which is currently estimated at nearly C$6 billion.
- Strengthened leadership with the addition of an on-the-ground highly experienced U.S. management team with proven track records in pharmaceuticals, consumer packaged goods, e-commerce, and marketing. Additionally, the Green Roads team holds added expertise in producing and distributing high quality cannabinoid-based health and wellness products.
- Speed to U.S. market with owned manufacturing and co-manufacturing platform located across two Florida-based facilities already producing significant revenue. Green Roads leverages its owned cGMP manufacturing infrastructure, which includes a production facility and warehouse, in addition to outsourced co-packing services for certain product lines allowing for lower overall capital commitments and increased flexibility to enter new consumer verticals.
- Expanded product portfolio with a range of high-margin products spanning major wellness categories, including oils, ingestibles, topicals, pet products, capsules, and soft gels. Green Roads' product portfolio also includes a collection of uniquely formulated products such as hemp flower coffee and line of functional gummies that target sleep, stress, and immune support. Valens plans to introduce Green Roads' award-winning formulations to the Canadian market which is expected to drive market share in the health and wellness vertical where the company intends to be a market leader.
- Enhanced distribution network and established brand loyalty, with a strong retail presence and robust direct-to-consumer e-commerce platform averaging 9,000 orders per month. With its differentiated, pharmacist-formulated products and unparalleled focus on the end user, Green Roads has secured sell-in at various major retail chains and an extensive network of independent retailers across the U.S.
"Since its inception, Green Roads has led the U.S. CBD industry with a 'people first' philosophy, producing what we view as the highest quality products while putting consumer protection and education at the forefront,” said Green Roads President and CEO Dale Baker. “With this transaction, we are able to further this mission and grow our community by reaching new markets, consumers and partners both north of the border and globally with one of the most trusted leaders in the cannabis consumer packaged goods manufacturing space. Together with Valens the growth opportunity is unmatched, and we look forward to working with the team to strengthen our leadership in the health and wellness category in North America and beyond."
The Green Roads acquisition remains subject to approval from the Toronto Stock Exchange and customary conditions and approvals, including Valens' lender approval. This transaction has been approved by the company's Board of Directors and is expected to close in June 2021.
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