Mergers & Acquisitions
Each week, Viridian publishes insights and analysis on completed M&A transactions in the prior week. Our analysis includes:
-
- 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
Transaction Summary
- No deals closed this week ended 11/15/24. This same week last year, there were two transactions with a $0.44M lower total disclosed value.
YTD Analysis
- YTD, 65 M&A transactions have closed with a total disclosed value of $821.16M, down sharply from the 106 deals for $1,701.32M in 2023. M&A is off to the lowest start of the last six years.
Pending Risk Deal Arb Analysis
-
- 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 collapsed to essentially zero this week, although we consider this a bit of an anomaly. We believe the company has cleared all significant hurdles to complete before closing the deal, which they continue to expect to happen prior to the end of the year. The spread now shows growing confidence that the deal will close.
- 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 was .11 on 11/15/24, recovering only slightly from its negative reading last week. In a down market, the spread generally contracts as investors sell the more liquid tier-one names. Following the DEA announcement, it reached a recent peak of 3.55 on April 30. At .34, the gap indicates that, in the aggregate, the climate is inhospitable for transactions in which Tier 1 MSOs purchase Tier 2 MSOs. This may not be the case for individual combinations, however, as there are broad valuation metric spreads between the companies in each tier. For example, TerrAscend, GTI, and Curaleaf all trade well above the Tier 1 average, while Ascend trades well below the Tier 2 average.
- 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 collapsed to essentially zero this week, although we consider this a bit of an anomaly. We believe the company has cleared all significant hurdles to complete before closing the deal, which they continue to expect to happen prior to the end of the year. The spread now shows growing confidence that the deal will close.
