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Valens To Acquire Canadian Edibles Manufacturer LYF Food Technologies

Valens Co. Inc., a Canada-based manufacturer of cannabis derivatives products, said it has agreed to acquire all of the issued and outstanding shares of LYF Food Technologies Inc. for C$24.9 million in a cash and share transaction.

The deal also includes up to an additional C$17.5 million in consideration payable upon the business achieving certain earn-out EBITDA milestones.

LYF is an edibles manufacturer based in Kelowna, British Columbia, with expertise in novel product creation, white label manufacturing and infusion technologies. The transaction is expected to close on or about February 18, 2021.

Valens noted that with the LYF acquisition will enable it to substantially expand its edible product portfolio and market share.

Further, Valens added that the LYF acquisition will strengthen the company's production capabilities for the Cannabis 2.0 and 3.0 markets as well as unlock significant growth potential.

Valens said its access to low-cost active ingredients combined with LYF's product IP formulations of over 100 recipes strengthens its capabilities to produce higher-margin, new-to-market edible formats in a segment that has limited product variability and increased consumer demand.

The diversified platform also contains additional R&D, testing and distribution capabilities, with multiple manufacturing lines capable of producing various new product formats such as real fruit gummies, caramel filled bars, peanut butter cups, hard candies, granola products, and other customized baked goods.

These precisely dosed edibles products are highly customizable, with vegan, sugar-free, low-sugar and natural ingredient offerings, according to Valens.

Similar to consumer trends in the U.S. cannabis market, edible products are anticipated to represent more than 10 percent of sales in the maturing Canadian cannabis market.

Valens expects the LYF acquisition will be accretive to its EBITDA and earnings per share in 2021.

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