Shares of Sundial Growers (NASDAQ:SNDL) stock took off earlier on Tuesday morning after a major business announcement.
The cannabis firm said in a press release that it made a $22 million strategic investment in fellow Canadian-based company Indiva Limited. Indiva manufactures cannabis products ranging from flower and capsules, to their main option: a wide variety of edibles. Also, Indiva trades on the Toronto Stock Exchange.
That said, this is a big deal for Sundial because it will help broaden the firm’s exposure to the edibles market. More broadly, Sundial will also assist in the development of Indiva’s products.
According to the release, the deal will require Sundial to make a private placement of 25 million shares of Indiva stock — priced at 44 cents per share. In turn, this would raise half of the initial $22 million investment, with the other $11 million coming from “a non-revolving term loan facility to Indiva.”
Niel Marotta, president and CEO of Indiva, said this regarding the SNDL stock deal:
We are delighted to welcome Sundial as a strategic investor in Indiva. The capital from this $22 million investment significantly improves Indiva’s balance sheet, expands our working capital, and provides the resources necessary to support strong growth in our business.
SNDL stock was up nearly 8% to start the day, but is now down about 1.5%.
On the date of publication, Nick Clarkson did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Nick Clarkson is a web editor at InvestorPlace.