SNDL Starts 2023 With a Key Acquisition: Is It a Game Changer?
Consolidation is inevitable in the cannabis industry, where many companies are struggling to grow and turn a profit. SNDL (NASDAQ: SNDL) has made acquisitions a key part of its strategy in recent years. By doing so, it has been able to transform its business from being just a marijuana grower to both a pot and alcohol retailer. And it has already begun 2023 with a new acquisition that should boost its sales yet again, but is it enough to make the stock a buy?
On Jan. 17, SNDL announced it completed the acquisition of cannabis extraction company Valens. SNDL says that the move "creates a low-cost vertically integrated Canadian company generating over a billion dollars in annualized pro forma revenue." That's a sizable leap for a cannabis company that in 2021 reported just 56 million Canadian dollars in sales for an entire year.
The total cost of the deal was CA$138 million, and it was funded primarily through shares. SNDL says it has CA$262.5 million in net cash on its books, which isn't a whole lot of money to fund big purchases, but it has been relying heavily on shares to acquire businesses, so even if its cash balance declines, that may not necessarily mean the company is going to stop wheeling and dealing.
Source Fool.com
