OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
Mergers & Acquisitions
Mergers & Acquisitions Summary
Each week, Viridian publishes insights and analysis on completed M&A transactions in the prior week. Our analysis includes:
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- M&A Market Commentary
- Public and Private Companies
- Buyers & Sellers
- YTD M&A Analysis
- M&A by Industry Sector
- Deal Structure and Valuation Analysis
- Pending Deal Risk Arb Analysis
- Valuation Gap Analysis
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Transaction Activities
Week ended 08/02/2024
- One deal for an undisclosed amount closed this week.
YTD Activities
- YTD, 40 M&A transactions have closed with a total disclosed value of $313.44M, down sharply from the 75 deals for $1,197.52M in 2023. M&A is off to the lowest start of the last six years.
- The announcement of the Verano / Cannabist asset sales transactions buoyed hopes for an M&A resurgence.
Pending Risk Deal Arb Analysis
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- Cansortium/RIV Arb Spread
- The chart below shows the risk arb spread for the Cansortium/RIV merger announced on May 30, 2024. RIV shareholders are to get 1.245 Cansortium shares for each RIV share owned. The arb spread narrowed during the week, ending at approximately 40% on 8/2/24, a level suggesting renewed confidence about the deal.
- Cansortium/RIV Arb Spread
Valuation Gap Analysis
- The Valuation Gap
- The Valuation Gap measures the difference between the EV/ NTM EBITDA multiple for the largest MSOs and the same multiple for the next smaller group. This measure has been a significant driver of M&A activity since a larger gap creates an opportunity for more accretive transactions.
- The companies used in the large-cap index now include Cresco (CL: CSE), Curaleaf (CURA: CSE), Green Thumb (GTII: CSE), TerrAscend (TSND: TSX), Trulieve (TRUL: CSE), and Verano (VRNO: CSE). The small company index now includes Ascend (AAWH: OTCQX), AYR (AYR.A: CSE), Cannabist (CBST: Cboe), Front (FFNT: CSE), Jushi (JUSHF: OTCQX), and Schwazze (SHWX: OTC).
- The gap decreased by 35bps to 1.15, the lowest in 2024. Following the DEA announcement, it reached a recent peak of 3.55 on April 30. At 1.15, the gap indicates a relatively inhospitable climate for transactions in which Tier 1 MSOs purchase Tier 2 MSOs. We expect the gap to increase, however, as the markets become more comfortable with the timing of 280e relief.
- Cansortium/RIV Arb Spread
- The chart below shows the risk arb spread for the Cansortium/RIV merger announced on May 30, 2024. RIV shareholders are to get 1.245 Cansortium shares for each RIV share owned. The arb spread narrowed during the week, ending at approximately 40% on 8/2/24, a level suggesting renewed confidence about the deal.
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