Village Farms International Announces the Acquisition of 70% Ownership of ROSE LifeScience in a Deal Valued at C$46.7 Million
The Dank Investor Posted On November 15, 2021 
Village Farms International Inc. (NASDAQ: VFF) (TSX: VFF), a leading supplier of fresh farm produce to retailers across the U.S. and Canada, announced that it had acquired 70% ownership in ROSE LifeScience, a Quebec-based, vertically-integrated, producer and supplier of cannabis.
The transaction is valued at up to C$46.7 million. As a result of the acquisition, ROSE will become the Quebec operational unit of the Canadian cannabis segment of Village Farms. ROSE’s headquarters and its existing team will continue to be in Quebec.
About Village Farms International, Inc.
Village Farms have many decades of experience as a vertically-integrated, Controlled Environment Agriculture-based supplier of high-value, high-growth, plant-based Consumer Packaged Goods opportunities. It is a leading supplier of fresh produce to grocery stores and retail chains across the US and Canada.
Also Read: Nova Cannabis Publishes Its Third Quarter Financial Results 2021, Ended Sep 30
Pure Sunfarms, one of the single largest cannabis operators in the world, and one of Canada’s best-selling brands, is a wholly-owned Canadian subsidiary of Village Farms. The company is making plans to enter US high-THC cannabis market using diverse strategies.
About ROSE LifeScience
Based in Quebec, ROSE LifeScience is involved in cannabis cultivation, marketing, commercialization, and logistics, and is fully focused on ensuring that Quebec benefits through the company’s responsible production, sale, and consumption of cannabis. In addition to its own products and expertise, ROSE provides industry services to some cannabis producers to foster a rich and diversified selection of cannabis in the Québec market.
ROSE is a third-party cannabis products commercialization expert in the Province of Québec, handling direct-to-retail sales, marketing, and distribution for various cannabis companies like Entourage Health, Sundial, Tilray and The Flowr Corporation, and also providing similar services to 10 Québec-based micro and craft growers.
The company also supplies its own brand of high-quality cannabis products to retail stores in Quebec. At its 55,000 square-foot Controlled Environment Facility (CEA) in Huntington, which was commissioned in 2020, ROSE produces its unique brands like Tam Tams, DLYS, Pure Laine, Elekt etc. The company is also a platform for many Quebec-based micro-producers for marketing their produce.
Highlights of the Acquisition
- By acquiring ROSE LifeScience, Village Farms will gain a significant presence in Québec as a supplier, producer and commercialization expert in cannabis. Québec has approximately 15% of the total Canadian retail cannabis sales valued currently at more than C$627 million. Most of the cannabis is sold as dried flower and pre-rolled products.
- The company also stands to benefit from the experience of many industry leaders from Quebec, who are likely to join the Village Farms and Pure Sunfarms team. Most of them have expertise in consumer-packaged goods and regulated industries, and their presence in the company will further strengthen its existing relationship in the cannabis market.
- The acquisition will also give the company control over ROSE’s 55,000 square foot, Health Canada-licensed Controlled Environment Agriculture (CEA) cultivation and processing facility,
According to Michael DeGiglio, CEO, Village Farms, the acquisition of ROSE has been a highly prudent and strategic move on the part of his company for getting entry into one of Canada’s largest provincial cannabis markets.
He believes that the proven track record of ROSE’s team, their strong foundation in the Quebec market, and the shared belief of the two companies in the importance of cultivation excellence, will benefit Village Farms tremendously.
The management of ROSE is equally enthusiastic about the new partnership. The company’s co-founder and President and Chief Executive Officer Davide Zaffino explained how they had always admired the success of Village Farms and Pure Sunfarms in the Canadian cannabis industry and how working in partnership with them would accelerate the success of ROSE also in its home province.
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 consisting of C$19.9 million in cash and 2,411,280 common shares of Village Farms, the value of which is C$26.8 million.
Any existing ROSE material debt has been paid off in full as a part of the consideration. The shares of the Village Farms issued under the agreement are subject to a lock-up period. Subject to compliance with securities laws, 33% of these shares will be released in four months, another 33% in eight months and the remaining 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 will continue to remain in their current roles with ROSE even after acquisition.
They have retained a 30% interest in ROSE. However, 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 in case of the occurrence of some triggering events prior to March 31, 2025.
