OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS

Mergers & Acquisitions

Mergers & Acquisitions

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

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Transaction Summary

  • One transaction closed this week for $56.67M, compared to two transactions for $49.25M in 2023.

 

YTD Analysis

  • YTD, 38 M&A transactions have closed with a total disclosed value of $313.44M, down sharply from the 68 deals for $1178.37M 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 spread closed on 7/12/24 at 31.9%, its lowest level since the deal was announced.

 

  

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 increased by 22bps to 1.62, still 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. At 1.41, 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 closed on 7/12/24 at 31.9%, its lowest level since the deal was announced.