EDMONTON, Alberta, and TORONTO – SNDL Inc. and 1CM Inc. entered into an arrangement agreement pursuant to which SNDL will acquire 32 cannabis retail stores operating under the Cost Cannabis and T Cannabis banners in Ontario, Alberta, and Saskatchewan. Unless otherwise specified, all amounts are in Canadian currency.
Under the terms of the Agreement, SNDL will acquire, with the option to assign, the 1CM Stores for total consideration of $32.2 million in cash, subject to certain adjustments at the closing of the Transaction. The 1CM Stores comprise two stores in Alberta, three stores in Saskatchewan, and twenty-seven stores in Ontario. The 1CM Stores generated aggregate annual revenue of $53 million during the fiscal year ended August 31, 2024, with thirty active stores at the fiscal year end.
The acquisition of the 1CM Stores will bring SNDL’s total owned and franchised cannabis retail store count to 219.
“We are excited to expand SNDL’s retail network and reinforce our leadership in Canada,” said Zach George, chief executive officer of SNDL. “The addition of these locations will increase SNDL’s exposure to a broad consumer base in key Canadian markets and aligns with our stated capital priorities as we build a sustainable cannabis retail portfolio at scale.”
1CM Chief Executive Officer Tanvi Bhandari added, “We are excited about the opportunity to unlock shareholder value with this transaction. We look forward to assisting SNDL with the transition and remain available to guide the company in its Canadian retail operations.”
1CM Board Recommendation
1CM’s board of directors unanimously approved the agreement, having determined that the Transaction is in the best interests of 1CM and fair to its shareholders. The 1CM Board unanimously recommends that shareholders vote in favour of the Transaction at the upcoming annual and special meeting of shareholders of 1CM.
In connection with the 1CM Board’s consideration of the agreement, Valuracion Appraisal & Consulting Services Ltd. provided an opinion to the 1CM Board that, as of the date of such opinion, and based upon and subject to the assumptions, limitations and qualifications set forth therein, the purchase price is fair, from a financial point of view, to 1CM shareholders.
Voting Support Agreements
Each of the directors and senior officers of 1CM who hold shares have entered into voting support agreements pursuant to which they have committed to vote their shares, representing in the aggregate, approximately 12.9 percent of the issued and outstanding 1CM common shares, in favour of the transaction at the Special Meeting, in accordance with the terms thereof.
Additional Transaction Details
The transaction is to be completed by way of an arrangement under the Business Corporations Act (Ontario). The Agreement includes customary provisions relating to non-solicitation, subject to customary “fiduciary out” provisions that entitle 1CM to terminate the Agreement and accept a superior proposal if SNDL does not match the superior proposal.
Closing is subject to customary closing conditions, including court approval, regulatory approvals and the approval of 1CM shareholders at the Special Meeting, which is expected to be held in June of 2025. The Transaction is not subject to a financing condition. Assuming the timely receipt of all required approvals, the Transaction is anticipated to close by the end of the third quarter of 2025. Assuming the Transaction is completed, 1CM anticipates returning a substantial portion of the sale proceeds to shareholders and using the balance of the proceeds for the development of new locations and for general corporate purposes. Further details will be provided in the information circular for the Special Meeting.
ABOUT SNDL INC.
SNDL Inc. (NASDAQ: SNDL), through its wholly owned subsidiaries, is one of the largest vertically integrated cannabis companies and private-sector liquor retailers in Canada, with retail banners that include Ace Liquor, Wine and Beyond, Liquor Depot, Value Buds, Spiritleaf and Superette. With products available in licensed cannabis retail locations nationally, SNDL’s consumer-facing cannabis brands include Top Leaf, Contraband, Palmetto, Bon Jak, La Plogue, Versus, Value Buds, Grasslands, Vacay, Pearls by Grön, No Future and Bhang Chocolate. SNDL’s investment portfolio seeks to deploy strategic capital through direct and indirect investments and partnerships throughout the North American cannabis industry.
ABOUT 1CM INC.
1CM Inc. (CSE: EPIC) is a retailer of cannabis and liquor in Canada with a track record of developing cash-flow positive locations. Following closing, 1CM expects to continue to develop new cannabis and liquor retail locations through organic growth and by way of future merger and acquisition transactions.
