SNDL Inc. (NasdaqCM:SNDL) entered into an arrangement agreement to acquire remaining 91.9% stake in The Valens Company Inc. (TSX:VLNS) for CAD 94.2 million on August 22, 2022. Under the terms of the Agreement, Valens' shareholders will receive, for each Valens Share, 0.3334 of a common share of SNDL. The combined company will operate as SNDL Inc., and Valens shareholders will own approximately 9.5% of the pro forma entity. The Agreement provides for, among other things, customary support and non-solicitation covenants from Valens, including customary "fiduciary out" provisions that allow Valens to accept a superior proposal in certain circumstances and a five-business day "right to match period" in favour of SNDL. The Agreement also provides for the payment of a termination fee of CAD 8 million payable to SNDL by Valens in the event the Transaction is terminated in certain specified circumstances.

The Transaction will be carried out by way of a court-approved plan of arrangement under the Canada Business Corporations Act. The implementation of the Transaction will be subject to the approval of at least two thirds of the Valens Shares entitled to be voted by Valens shareholders and the approval of a simple majority of the Valens Shares entitled to be voted by Valens shareholders, other than Valens shareholders required to be excluded under applicable laws, at a special meeting expected to be convened by Valens by the end of November 2022 (the "Meeting"), Shares to be issued pursuant to the Arrangement shall have been approved for listing on Nasdaq, and the receipt of applicable orders from the Ontario Superior Court of Justice and applicable regulatory approvals, including under the Competition Act (Canada) and the applicable provincial liquor and cannabis regulators. Valens' board of directors has unanimously approved the Transaction after receiving the unanimous recommendation of a special committee of Valens directors (the "Special Committee"). Valens' board of directors has unanimously resolved to recommend that the shareholders of Valens vote in favour of the Transaction. SNDL's Board of Directors also unanimously approved the Transaction. All directors and executive officers of Valens have entered into voting support agreements with SNDL pursuant to which, among other things, the parties have agreed to vote their Valens Shares in favour of the Transaction. The shareholders meeting of Valens is scheduled on November 29, 2022. As of November 22, 2022, both Institutional Shareholder Services (“ISS”) and Glass Lewis & Co. (“Glass Lewis”) have recommended that Valens shareholders (the “Valens Shareholders”) vote in favour of the arrangement. On November 29, 2022, shareholders of Valens approved the transaction. As of December 13, 2022, The Valens Company has been granted additional 180 calendar day grace period by Nasdaq to regain compliance with Minimum Bid Price rule. As a result of the extension, The Valens Company now has until June 12, 2023, to regain compliance with the Bid Price Requirement. The Ontario Superior Court of Justice (Commercial List) has granted a final order approving the transaction. The transaction is expected to close during January 2023. Together with incremental revenues from greater distribution of Valens products, it is estimated that the Transaction will deliver upwards of CAD 15 million of additional EBITDA on an annual run-rate basis through synergies and other strategic initiatives.

Cormark Securities Inc. has provided a fairness opinion to the Special Committee of Valens that, subject to the assumptions, limitations and qualifications set out in such fairness opinion, the consideration to be received by Valens shareholders pursuant to the Transaction is fair from a financial point of view to Valens' shareholders. ATB Capital Markets Inc. is acting as financial advisor to SNDL. Ranjeev Dhillon and Rami Chalabi of McCarthy Tétrault LLP acting as legal counsels to SNDL. Cormark Securities Inc. is acting as financial advisor and Donald Belovich of Stikeman Elliott LLP is acting as legal counsel to Valens. Laurel Hill Advisory Group, LLC acted as information agent with a service fee of $50,000 (CAD 67,869) and Computershare Investor Services Inc. acted transfer agent to Valens. Marcum LLP acted as accountant while Odyssey Trust Company acted as transfer agent to SNDL.

SNDL Inc. (NasdaqCM:SNDL) completed the acquisition of remaining 91.9% stake in The Valens Company Inc. (TSX:VLNS) on January 17, 2023. Frank Krasovec has been appointed to the Board of Directors of SNDL, effective January 17, 2023. The Board now consists of six directors. Zach George will continue to serve as Chief Executive Officer of SNDL and Tyler Robson, the former CEO of Valens, will join the leadership team as President of Cannabis. Andrew Stordeur, SNDL's former President and Chief Operating Officer has left the company effective January 13, 2023. Immediately prior to the effective date of the Transaction, SNDL owned an aggregate of 6.5 million Valens Shares, representing approximately 8.1% of the outstanding Valens Shares at such time. Following the closing of the Transaction, there are 260.7 million SNDL Shares outstanding, with existing SNDL Shareholders holding approximately 89.4% of such outstanding SNDL Shares and former Valens Shareholders holding approximately 10.6% of such outstanding SNDL Shares. The Valens Shares are expected to be delisted from the Toronto Stock Exchange.