Sunniva, a multinational cannabis firm, plans to spin off its Canadian assets and list the new entity on the Toronto Stock Exchange and Nasdaq.
The Canadian assets in the proposal include:
- Sunniva Medical, which is building the Sunniva Canada Campus with a 740,000-square-foot greenhouse facility in British Columbia. Sunniva Medical has a supply agreement with Canopy Growth for distribution of Sunniva-branded products. Under that deal, Canopy will purchase approximately 45% of Sunniva’s annual production capacity.
- Natural Health Services, which owns and operates a network of seven clinics in Canada specializing in medical cannabis.
Sunniva’s U.S. assets will remain listed on the Canadian Securities Exchange under the ticker symbol SNN.
Those assets include:
- CP Logistics, which operates the Sunniva California Campus. That entity includes a 489,000-square-foot greenhouse in Cathedral City, California, that’s under construction and an onsite dispensary with a distribution license.
- Full-Scale Distributors, which through its brand Vapor Connoisseur provides private-label vaporizers and accessories.
If the move is completed, shareholders would get one share of each entity – a deal that Beacon Securities analyst Doug Cooper called an “excellent value creation strategy” in his latest research note on the firm.
“Such a spin strategy sets the company up for M&A – either for some of its parts to be taken out (i.e., Canada) or for SNN to pursue M&A on its own – especially in the U.S.,” Cooper wrote.
He rates the firm as a “speculative buy” with a target 12-month price of $16.50, representing a potential 105% return from the stock’s closing price of $8.05 on Tuesday.