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Why Is Sundial Growers (SNDL) Stock in the Spotlight Today?

Sundial Growers (NASDAQ:SNDL) stock is in the spotlight today on news the company has completed its acquisition of Alcanna.

The Sundial Growers logo is on a phone screen with a light blue background in front of the sundial logo on a white background
Source: Shutterstock

So what do you need to know?

In a news release, Sundial Growers said that it has concluded the acquisition of fellow cannabis producer Alcanna. As a result, Alcanna stock will stop trading on the Toronto Stock Exchange on April 1.

SNDL stock was initially up more than 4% on this news, before slipping into the red by more than 4%. This move also comes on a broadly down morning for the market.

What Happened With SNDL Stock

Sundial announced its planned acquisition of Alcanna last October. The $320 million purchase is expected to help Sundial expand its retail cannabis network and grow the cannabis products it offers in Canada. Alcanna is Canada’s largest private liquor retailer, with 171 locations across the country.

According to Sundial Growers CEO Zach George, “Alcanna’s value-focused model in liquor retailing has created market stability, and we believe that the replication of this playbook in cannabis has strong potential to drive a similar result.”

Why It Matters

Sundial Growers is looking to grow and expand amid a wave of consolidation in the Canadian cannabis market. The company has struggled with its financial results and has been threatened with delisting by the Nasdaq unless it can keep its share price above the $1 threshold.

To try and boost its share price, the Calgary, Alberta-based company has announced a 100 million CAD stock repurchase program. This comes after the company has diluted the number of shares outstanding in an effort to raise cash and remain operational. In the last two years, Sundial Growers has increased its number of outstanding shares by more than 2,000%.

What’s Next for Sundial Growers

The Alcanna acquisition has some promise to help Sundial Growers expand its operation and increase its revenue. However, it will take time for the retail network provided by Alcanna to become beneficial to Sundial Growers. In the meantime, the cannabis producer remains a troubled entity with a stock that trades for less than $1.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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