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Village Farms International, Inc. (NASDAQ:VFF) (TSX:VFF) announced Monday that it is acquiring a stake in privately-held, Québec-based ROSE LifeScience, a vertically integrated branded cannabis producer, supplier and commercialization expert.
Under the share purchase agreement terms, Village Farms acquired 70% of all outstanding shares of ROSE on a debt-free basis for CA$46.7 ($37.2 million) in cash and stock.
The purchase price includes CA$19.9 million in cash and a total of 2,411,280 common shares of Village Farms valued at CA$26.8 million. As part of the consideration, any existing ROSE material debt has been paid off in full.
In addition, Village Farms' shares are subject to lock-up agreements and to compliance with applicable securities laws. The company said that 33% of these shares would be released in four months, another 33% would be released after eight months, and the remaining shares would be released after one year.
The acquisition will expand the presence of Village Farms, which is based in Vancouver, British Columbia, in Québec, as a cannabis supplier, producer, and commercialization expert, representing roughly 15% of total Canadian retail cannabis sales at the current annualized run rate of more than C$627 million, the vast majority of which is dried flower and pre-rolled products, according to Statscan.
ROSE is a third-party cannabis products commercialization expert in Québec, which acts as the exclusive, direct-to-retail sales, marketing, and distribution entity for Entourage Health Corp. (TSXV:ENTG)(OTCQX:WDDMF) (FSE: 4WE), Sundial Growers (NASDAQ:SNDL), Tilray Inc (NASDAQ:TLRY), and The Flowr Corporation (OTCQX:FLWPF), as well as 10 Québec micro and craft growers throughout the province.
"ROSE immediately expands our reach to more than 90%1 of all Canadian retail cannabis sales and represents a major step forward in Pure Sunfarms' strategy to become the leading national supplier of cannabis in Canada, with at least a 20% market share in the dried flower category," said Mandesh Dosanjh, president and CEO of Village Farm's Canadian subsidiary Pure Sunfarms.
The agreement also includes a Québec-based, 55,000 square foot Health Canada-licensed Controlled Environment Agriculture cultivation and processing facility.
Moreover, the deal adds seasoned industry experts, bolstering existing relationships in the Québec cannabis market and leveraging specialized, deep experience in both consumer-packaged goods and regulated industries.
Co-founder, president and CEO of ROSE, Davide Zaffino and co-founder and COO of ROSE, Brian D. Stevenson - who were among the sellers of ROSE in this transaction - will remain in their current roles with ROSE post-acquisition and have retained a 30% interest in their company.
"ROSE adds an exceptional group of Québec-based experts to our Canadian cannabis operations," Michael DeGiglio, CEO of Village Farms said. "The team has a proven track record of success and shares our belief in the importance of cultivation excellence and the advantage of innovation and continuous improvement. We look forward to building on ROSE's strong foundation in the Québec market, with a long-term commitment to the Company's Québec heritage."
Village Farms can acquire the retained interest, under the deal with the management shareholders, upon the occurrence of certain triggering events prior to March 31, 2025.
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Village Farms' shares traded 0.91% higher at $8.91 per share at the time of writing Monday morning.
Photo: Courtesy of Village Farms International, Inc.
