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Valens Agrees to Buy Citizen Stash in All Stock Cannabis Deal

Valens agrees to purchase premium pre-rolled cannabis company Citizen Stash for $54.3 million.
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Cannabis company Valens Company  (VLNCF)  shares were falling Tuesday after the company said that it agreed to acquire all outstanding shares of premium marijuana brand Citizen Stash. 

The all stock transaction is valued at about $54.3 million . Citizen Stash shareholders will receive 0.1620 of a Valens share for each share they own. The purchase rice represents a premium of about 35.1% over Citizen Stash's 15-day average. 

Valens shares on Tuesday were down 2.7% to $2.37 at last check.

"Citizen Stash's asset light model, and proprietary genetics will provide us significant operational flexibility and an opportunity to leverage the growing capabilities of our existing LP partners," Valens CEO Tyler Robson said in a Tuesday statement

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The acquisition is expected to be accretive to Valens in 2021 and 2022 before synergies, and will provide Valens with "strategic, asset-light expansion" into the estimated $2.7 billion high-margin premium flower category. 

The flower and pre-roll segment currently accounts for about 70% of Canadian cannabis retail sales, according to the company. 

Citizen Stash is the highest ranked premium brand by market share in the flower category with an average selling price above $13 per gram.

"Citizen Stash's asset light model, and proprietary genetics will provide us significant operational flexibility and an opportunity to leverage the growing capabilities of our existing LP partners," Robson said. 

The company expects Citizen Stash to add a revenue multiple of about 4.3x to first half fiscal 2021 annualized revenue.