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Sundial Growers to Buy Cannabis Retailer Inner Spirit for C$131M

In a deal linking two Calgary cannabis providers, Sundial will pay C$131 million (US$106.7 million) of cash and stock for Inner Spirit.
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In a deal linking two Calgary cannabis providers, Sundial Growers  (SNDL) - Get Sundial Growers Inc. Report will pay C$131 million (US$106.7 million) of cash and stock for Inner Spirit Holdings INSHF.

Under the terms, Sundial will pay a total of C$0.39 for each Inner Spirit share. The amount includes C$0.30 cash and 0.835 Sundial share for each Inner Spirit share. 

At last check Sundial shares traded on Nasdaq were up 4.6% at US$0.83. Inner Spirit shares traded over the counter in the U.S. closed Tuesday off 4.2% at US$0.20.

"Sundial becomes a stronger and more diverse cannabis company by acquiring Inner Spirit and the Spiritleaf retail store network," Sundial Chief Executive Zach George said in a statement

Inner Spirit's franchise-based retail network "has grown from coast to coast and offers a differentiated and premium in-store experience to consumers."

The Spiritleaf retail chain is Canada's largest single-brand retailer with 86 stores. The company is projected to exceed 100 stores by this summer. 

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Both companies boards have approved the terms. The deal is expected to close in the third quarter, subject to conditions including court and regulatory clearances and a vote of Inner Spirit shareholders.

All Inner Spirit directors and officers, plus certain holders, have agreed to vote their stakes -- in total nearly 30% -- for the transaction.

Read More: Buy Trulieve Cannabis Stock, Not Sundial Growers

In March, Sundial reported a loss from continuing operations of C$64.1 million (US$51.7 million), compared with a net loss of C$71.4 million ($57.6 million) in the third quarter.

Fourth-quarter revenue of C$16.9 million ($13.6 million) increased 4% from a year earlier and exceeded the analyst consensus estimate of $11.1 million derived from a FactSet survey.

In February, Sundial shares fell after the company filed a shelf registration with the U.S. Securities and Exchange Commission to issue as much as $1 billion of securities over time.