– Acquisition
Adds a Substantial Presence in One
of Canada's Largest Cannabis
Markets, Experienced, Québec-Based Cannabis Leadership and a
Québec-Based Production Facility –
VANCOUVER, BC, Nov. 15, 2021 /CNW/ - Village Farms
International, Inc. ("Village Farms" or the "Company") (NASDAQ:
VFF) (TSX: VFF) today announced it has acquired 70% ownership of
privately-held, Québec-based, ROSE LifeScience ("ROSE"), a leading
vertically integrated branded cannabis producer, supplier and
commercialization expert in the Province of Québec, effective today
("Closing Date"). The transaction is valued at up to C$46.7 million. ROSE becomes the Québec
operational unit of Village Farms' Canadian cannabis business
segment, with ROSE's headquarters and the existing team remaining
in Québec.
ROSE is a leading third-party cannabis products
commercialization expert in the Province of Québec, acting as the
exclusive, direct-to-retail sales, marketing and distribution
entity for Entourage Health, Sundial, Tilray and The Flowr
Corporation and 10 Québec micro and craft growers throughout
Québec. ROSE also distributes to Québec retail its own brand of
high-quality cannabis products. Tam
Tams is grown and processed at ROSE's Québec-based, Health
Canada-licensed 55,000 square-foot Controlled Environment
Agriculture (CEA), purpose-built facility in Huntingdon, which was commissioned in 2020.
ROSE also enables a platform for commercialization in the Québec
market for several Québec-based micro-producers under its DLYS
brand.
Highlights of the Acquisition
- Adds a substantial presence in the Province of Québec as a
cannabis supplier, producer and commercialization expert in the
Province of Québec, which represents approximately 15%1
of total Canadian retail cannabis sales at the current annualized
run rate of more than C$627
million1, the vast majority of which is dried
flower and pre-rolled products;
- Adds experienced, Québec-based industry leaders who will join
the Village Farms/Pure Sunfarms team, bolstering extensive existing
relationships in the Québec cannabis market and leveraging
specialized, deep experience in both consumer-packaged goods and
regulated industries; and,
- Adds a Québec-based, 55,000 square foot, Health Canada-licensed
Controlled Environment Agriculture (CEA) cultivation and processing
facility, which is included in the transaction.
Village Farms Management Commentary
"The acquisition of ROSE – by far the most successful
Québec-based cannabis operator in our view – is a prudent and
strategic means by which to enter, and rapidly ramp sales, in one
of Canada's largest provincial
cannabis markets," said Michael
DeGiglio, CEO, Village Farms. "ROSE adds an exceptional
group of Québec-based experts to our Canadian cannabis operations.
The team has a proven track record of success, and shares our
belief in the importance of cultivation excellence, as well as 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."
"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 Chief Executive Officer, Pure
Sunfarms. "ROSE is very well respected in the Québec cannabis
industry, with a reputation for leadership and brand strategy
success that we have come to know well and respect. We look forward
to pursing the new opportunities, both near-term and long-term,
created by the addition of ROSE as our Québec-based cannabis
operational unit."
ROSE Management Commentary
"We have long admired the success of Village Farms and Pure
Sunfarms in the Canadian cannabis industry. We are proud to join
forces with them to accelerate our successes, and seize this
opportunity to further evolve the industry in our home province of
Québec," said Davide Zaffino,
co-founder and President and Chief Executive Officer, ROSE. "We
cherish our Québec roots, and deeply believe in our province's
culture and values. As always, we remain committed to ensuring that
Québec benefits from the responsible production, sale and
consumption of cannabis. As part of the outstanding family of
cannabis businesses within Village Farms, we are even better
positioned to continue playing this leading role in the Québec
landscape."
Purchase Price
Under the terms of the Share Purchase Agreement, Village Farms
acquired 70% of all outstanding shares of ROSE on a debt-free basis
for a consideration comprised of cash and a total of 2,411,280
common shares of Village Farms ("Village Farms Shares") being (i)
C$19.9 million in cash, (ii) Village
Farms Shares in the total value of C$26.8
million. As part of the consideration, any existing ROSE
material debt has been paid off in full.
The Village Farms Shares issued under the Share Purchase
Agreement are subject to lock-up agreements, and subject to
compliance with applicable securities laws, 33% of these shares
will be released in four months, another 33% of these shares to be
released after eight months and the remaining shares to be released
after one year.
The co-founder and President and Chief Executive Officer of
ROSE, Davide Zaffino, and co-founder
and Chief Operating Officer of ROSE, Brian
D. Stevenson (the "Management Shareholders"), 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 ROSE ("Retained Interest"). In conjunction with the
acquisition, Village Farms and the Management Shareholders have
entered into an agreement providing Village Farms with a pathway to
acquire the Retained Interest upon the occurrence of certain
triggering events prior to March 31,
2025. The price for this call right was set at a multiple
solely based on ROSE's adjusted EBITDA performance of the
applicable prior calendar year.
Notes
1. Statscan. Based on data as at August
31, 2021.
About Village Farms International, Inc.
Village Farms leverages decades of experience as a large-scale,
Controlled Environment Agriculture-based, vertically integrated
supplier for high-value, high-growth plant-based Consumer Packaged
Goods opportunities, with a strong foundation as a leading fresh
produce supplier to grocery and large-format retailers throughout
the US and Canada, and new
high-growth opportunities in the cannabis and CBD categories in
North America and selected markets
internationally.
In Canada, the Company's
wholly-owned Canadian subsidiary, Pure Sunfarms, is one of the
single largest cannabis operations in the world, the lowest-cost
greenhouse producer and one of Canada's best-selling brands. The Company also
owns 70% of Québec-based, ROSE LifeScience, a leading third-party
cannabis products commercialization expert in the Province of
Québec,
In the US, wholly-owned Balanced Health Botanicals is one of the
leading CBD brands and e-commerce platforms in the country.
Subject to compliance with all applicable US federal and state laws
and stock exchange rules, Village Farms plans to enter the US
high-THC cannabis market via multiple strategies, leveraging one of
the largest greenhouse operations in the country (more than 5.5
million square feet in West
Texas), as well as the operational and product expertise
gained through Pure Sunfarms' cannabis success in Canada.
Internationally, Village Farms is targeting selected, nascent,
legal cannabis and CBD opportunities with significant medium- and
long-term potential, with an initial focus on the Asia-Pacific region and Europe.
About Rose LifeScience
ROSE LifeScience is committed to ensuring that Québec benefits
from the responsible production, sale, and consumption of cannabis.
From cannabis cultivation to marketing, commercialization, and
logistics, the Huntingdon, QC
company plays a key role in the province. In addition to its own
products and expertise, ROSE provides specialized industry services
to selected producers to encourage a diversified offer on the
Québec market. For more information, visit
www.roselifescience.ca.
Cautionary Statement Regarding Forward-Looking
Information
This press
release contains forward-looking
statements within the meaning of the United States Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended,
(the "Securities Act") and Section 21E of
the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and is subject to
the safe harbor created by those sections. This press release
also contains "forward-looking
information" within the meaning of applicable
Canadian securities law. We refer to such forward-looking
statements and forward-looking information collectively
as "forward-looking
statements".
Forward-looking statements in
this press release relate to
the Company's and ROSE's future outlook or financial position and
anticipated events or results and may include statements regarding
the financial position, income, business strategy, budgets,
expansion plans, litigation, projected
production, expectations regarding the Québec
cannabis market, the effect that the acquisition of ROSE will have
on the Company's net income, sales and EBITDA
margin, projected costs, capital
expenditures, financial results, profitability, taxes, plans and
objectives of or involving the Company and
ROSE.
Particularly, statements regarding future results,
performance, achievements, prospects or opportunities for the
Company or ROSE, the greenhouse vegetable industry and the cannabis
industry and market are forward-looking statements. In some cases,
forward-looking information can be identified by such terms as
"outlook", "may", "might", "will", "could", "should", "would",
"occur", "expect", "plan", "anticipate", "believe", "intend",
"try", "estimate", "predict", "potential", "continue", "likely",
"schedule", "objectives", or the negative or grammatical variation
thereof or other similar expressions concerning matters that are
not historical facts. The forward-looking statements in this press
release are subject to risks that may include, but are not limited
to: our operating history, including that of ROSE, Balanced Health,
Pure Sunfarms and our start-up operations of growing hemp in
the United States; the legal
status of Pure Sunfarms, ROSE and Balanced Health cannabis
business; risks relating to the integration of ROSE into our
business; risks relating to obtaining additional financing,
including our dependence upon credit facilities; potential
difficulties in achieving and/or maintaining profitability;
variability of product pricing; risks inherent in the cannabis,
hemp, CBD, cannabinoids, and agricultural businesses; market
position, ability to leverage current business relationships for
future business involving hemp and cannabinoids, the ability of
Pure Sunfarms and ROSE to cultivate and distribute cannabis in
Canada; existing and new
governmental regulations, including risks related to regulatory
compliance and regarding obtaining and
maintaining licenses required under the Cannabis Act (Canada), the Criminal Code and other Acts,
S.C. 2018, c. 16 (Canada) for its
Canadian operational facilities), and changes in our regulatory
requirements; legal and operational risks relating to expected
conversion of our greenhouses to cannabis production in
Canada and in the USA; risks related to rules and regulations at
the US federal (Food and Drug Administration and United States
Department of Agriculture), state and municipal levels with respect
to produce and hemp, cannabidiol-based products commercialization;
retail consolidation, technological advances and other forms of
competition; transportation disruptions; product liability and
other potential litigation; retention of key executives; labor
issues; uninsured and underinsured losses; vulnerability to rising
energy costs; environmental, health and safety risks, foreign
exchange exposure, risks associated with cross-border trade;
difficulties in managing our growth; restrictive covenants under
our credit facilities; natural catastrophes; the ongoing and
developing COVID-19 pandemic; and tax risks.
The Company has based these forward-looking statements on
factors and assumptions about future events and financial trends
that it believes may affect its financial condition, results of
operations, business strategy and financial needs. Although the
forward-looking statements contained in this press release are
based upon assumptions that management believes are reasonable
based on information currently available to management, there can
be no assurance that actual results will be consistent with these
forward-looking statements. Forward-looking statements necessarily
involve known and unknown risks and uncertainties, many of which
are beyond the Company's control, that may cause the
Company's or the industry's actual results, performance,
achievements, prospects and
opportunities in future periods to differ materially from those
expressed or implied by such forward-looking statements. These
risks and uncertainties include, among other things, the factors
contained in the Company's filings with securities
regulators, including this press release. In particular, we caution
you that our forward-looking statements are subject to the ongoing
and developing circumstances related to the COVID-19 pandemic,
which may have a material adverse effect on our
business, operations and
future financial results.
When relying on forward-looking statements to make decisions,
the Company cautions readers not to place undue reliance on these
statements, as forward-looking statements involve significant risks
and uncertainties and should not be read as guarantees of future
results, performance,
achievements, prospects and
opportunities. The forward-looking statements made in this press
release relate only to events or information as of the date on
which the statements are made in this press release. Except as
required by law, the Company undertakes no obligation to update or
revise publicly any forward-looking statements,
whether as a result of new
information, future events or otherwise, after the date on
which the statements are made or to reflect the occurrence of
unanticipated events.
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SOURCE Village Farms International, Inc.