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Cannabis Deal Tracker: Investment and M&Amp;A Activity in the Cannabis Industry June 22nd - June 26th, 2020

 

July 1, 2020 (Investorideas.com Newswire) CAPITAL RAISES: Transactional Activity: Week 26 ended June 26, 2020 saw a higher dollar volume but fewer number of transactions vs. the prior week of this year and a sharply lower dollar volume and number of transactions vs the prior year period. We recorded 5 capital raise transactions totaling $32.5 million, vs. 13 transactions totaling $235.4 million during the same week in 2019. Average tranche size was $6.5 million this week, vs. $18.1 million in the prior year period.

Largest Cap Raise: Aurora Cannabis Inc. (TSX: ACB) (NYSE: ACB), and Alcanna Inc. (TSX: CLIQ) jointly announced a bought deal, short-form prospectus offering for aggregate gross proceeds of C$27.6 million. Aurora sold 9.2 million shares at C$3 per share, exiting its 23% stake in Alcanna. Aurora also agreed to cancel 1.75 million Alcanna warrants with exercise prices of C$15 for no consideration. The C$3 per share price represented an enterprise value of approximately C$465.6 million or 0.63 times Alcanna trailing 12 month sales.

Public vs. Private Cap Raises: Of the 5 capital raises, all were closed by public companies. So far in 2020, public companies have accounted for 81% of all capital raises, vs. 66% for the same period in 2019. In 2020, public companies have accounted for 91% of total dollars raised, vs. 68% for the same period in 2019. The dramatic recovery in cannabis stocks, both in terms of price and volume, is driving public companies to the capital markets to seek both equity and debt financings.

Public Company Listings: Of the 5 public company capital raises, all 5 are listed on Canadian exchanges (2 on the CSE and 3 on the TSX), and 4 are also U.S. exchange listed (3 on the OTC, 1 on the NYSE) and 1 is listed on the Frankfurt Stock Exchange (FSE).

Equity vs. Debt Cap Raises: Equity-based capital raises accounted for 4 of the 5 transactions and 91% of the proceeds raised. Debt financing has slowed as a percentage of total capital raised since the major MSO’s completed several large debt financings just prior to COVID-19.

Largest Debt Raise: Auxly Cannabis Group Inc. (TXSV:XLY) (OTCQX:CBWTF) completed a C$3 million, third tranche add-on to its previously announced C$25 million standby facility. The unsecured convertible debenture was issued with a 2-year maturity, 7.5% coupon and an exercise price of C$0.31 representing a 2% premium over the previous equity closing price of C$0.30. An additional 5.4 million warrants with 2-year maturity and an exercise price of C$0.37 (22% premium) were included in the transaction. Total warrant coverage was approximately 166% with an effective cost of 20.79%.

Cap Raises by Sector: The 4 of the 5 capital raises occurred in the Cultivation & Retail sector with 1 in the Investments/M&A sector.

MERGERS & ACQUISITIONS

Transactional Activity: Week 26 saw no M&A transactions, vs. 7 in the prior year period. This marks the third week in the last 5 with no M&A activity. Constrained capital availability has led several companies to cancel previously announced acquisitions and focus on cash production in their existing operations. Increased M&A activity is expected in the second half of 2020, given the large pools of capital that have been raised by cannabis SPACs.

VIEW DEAL TRACKERS

The Viridian Cannabis Deal Tracker is a proprietary information service that monitors capital raise and M&A activity in the legal cannabis and hemp industry. Each week the Tracker aggregates and analyzed all closed deals and segments each according to key metrics:

  • Industry Sector (one of 12 sectors, from Cultivation to Brands)
  • Dollar value of the transaction
  • Region in which the deal occurred (country or U.S. state)
  • Status of the company announcing the transaction (Public vs. Private)
  • Deal structure (equity vs. debt)
  • Key deal terms

The Viridian Cannabis Deal Tracker provides the market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital allocation and M&Amp;A strategy.

Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&Amp;A transactions totaling over $45 billion in aggregate value.

*Copyright © 2020 by Viridian Capital Advisors

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher. No part of this material may be (I) copied, photocopied, or duplicated in any form, by any means, or (II) redistributed without Viridian's prior written consent.

*Disclaimers

The information contained herein is for informational purposes and is not intended as a research report. It should not be construed as Viridian recommending investment in cannabis companies or as a solicitation to buy or sell any security or engage in a particular investment strategy. Investment in cannabis companies entails substantial risk. Before acting on any information, you should consider whether it is suitable for your particular circumstances and consult all available material, and, if necessary, seek professional advice.

Viridian Capital Advisors and its affiliates, as well as their respective partners, directors, shareholders, and employees, may have a position in the securities mentioned herein or may make purchases and/or sales from time to time. Viridian Capital Advisors, through broker-dealer services provided by Bradley Woods & Co. Ltd., (Member FINRA/SIPC), may act, or may have acted in the past, as a financial advisor to certain companies mentioned herein and may receive, or may have received, a remuneration for their services from those companies.

The above information whether in part or in its entirety neither constitutes an offer nor makes any recommendation to buy or sell any securities.

About Viridian Capital Advisors, LLC

Viridian Capital Advisors (www.viridianca.com) is a financial and strategic advisory firm dedicated to the cannabis market. We are a data- and market intelligence-driven firm that provides investment, M&A, corporate development, and investor relations services to emerging growth companies and qualified investors in the cannabis sector. Our banking practice, through broker-dealer Bradley Woods & Co. Ltd. (Member FINRA/SIPC), provides capital and M&A services to fund the growth of our clients, while our advisory practice helps to position and build their businesses. Our team's decades of high level operating and transactional experience on Wall Street in a variety of emerging sectors, allows Viridian to provide comprehensive strategic and financial solutions that assist cannabis enterprises in realizing their full potential.

Marijuana remains illegal under federal law. The federal government does not recognize marijuana to have any medicinal value. Marijuana cultivation, possession, consumption, sales, and distribution are illegal under federal laws and also certain state laws. Investors in cannabis may be subject to law enforcement actions. Please note that there are differences in marijuana laws from one state, county, or city to another. Furthermore there are substantial risks associated with investing in cannabis companies, including, without limitation, changes in applicable laws, rules, and regulations, risks associated with the economic environment, the financing markets, and risks associated with a company's ability to execute on its business plan.

Contact Us:

Viridian Capital Advisors, LLC
contact@viridianca.com

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