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 06/14/2024
- Three transactions closed this week for $18.08M, compared to one this week last year for undisclosed transaction value.
YTD Activities
- YTD, 35 M&A transactions have closed with a total disclosed value of $217.97M, down sharply from the 58 deals for $942.93M in 2023. M&A is off to the lowest start of the last six years.
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 closed on 6/18/24 at 59.5%. We are not surprised that the spread is this wide, given the newness of the deal, the likely time to close, and the various moving pieces that need to fall in place. We will be monitoring the spread weekly.
- 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), Columbia Care (CCHW: CSE), 4Front (FFNT: CSE), Jushi (JUSHF: OTCQX), and Schwazze (SHWX: OTCQX).
- The gap dropped 43bps to 1.19, significantly lower than its 52-week average of 1.94. Following the DEA announcement, it reached a recent peak of 3.55 on April 30. We expect the gap to rebound 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 closed on 6/18/24 at 59.5%. We are not surprised that the spread is this wide, given the newness of the deal, the likely time to close, and the various moving pieces that need to fall in place. We will be monitoring the spread weekly.
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