SNDL Share Consolidation Vote Falls Short as Board Pursues C$50M Bid

Shareholders at SNDL Inc.’s (SNDL ) 2026 Annual and Special Meeting of Shareholders withheld the two-thirds support required to approve a proposed consolidation of the company’s common shares, SNDL said in an October 15, 2026 announcement that also reported preliminary third quarter free cash flow of approximately C$20 million and detailed plans for a possible substantial issuer bid of up to C$50 million.

Shareholder Meeting Results

The special resolution authorizing a potential consolidation of SNDL’s common shares received 54.1% of the votes cast in favour, short of the required two-thirds approval. SNDL said it will not proceed with the proposed share consolidation under the authority sought at the meeting, and that detailed voting results will be filed on SEDAR+ and furnished with the company’s applicable filings in the United States.

Shareholders elected all five director nominees standing for election at the meeting, each with a majority of votes cast in favour, and approved the appointment of the company’s auditor. The resolution fixing the number of directors at five received 89.8% of the votes cast in favour, and the appointment of the auditor received 86.2% support.

“We respect the outcome of the vote and have listened carefully to our shareholders,” said Zach George, SNDL’s chief executive officer. “Shareholder feedback emphasized a desire for an accelerated return of capital, with only a simple majority supporting a share consolidation at this time.” George said the company’s capital allocation priorities remain maintaining balance sheet strength, investing selectively in opportunities that support long-term growth and returning capital where the company believes it will create the greatest long-term value for shareholders, and that SNDL has returned more than C$43 million to shareholders through share repurchases over the past 12 months.

SNDL said it expects preliminary third quarter 2026 free cash flow of approximately C$20 million. “For the third quarter, we expect to report the highest quarterly free cash flow in SNDL’s history,” George said. The company said the result benefited from approximately C$10.6 million associated with the initial unwinding of its captive insurance arrangement, net of related premium payments, as well as working capital initiatives and cash generation across the business.

The preliminary financial information is unaudited and remains subject to completion of the company’s quarter-end closing and review procedures. Free cash flow is a non-IFRS financial measure, which SNDL said does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures reported by other companies. SNDL defines free cash flow as the total change in cash and cash equivalents less cash used for common share repurchases, dividends if any, changes to debt instruments, changes to long-term investments, and net cash used for acquisitions plus cash provided by dispositions. A reconciliation table in the announcement, presented in thousands of Canadian dollars, lists a change in cash and cash equivalents of (50,729), issuance/repurchase of common shares of 10,042, investments of (121), SunStream of 60,762 and free cash flow of 19,954.

During the third quarter of 2026, SNDL repurchased approximately 5.4 million common shares under its existing share repurchase program, according to the company, bringing repurchases over the 12 months ended September 30, 2026 to approximately 21.8 million common shares for approximately C$43.4 million.

The company’s board of directors has directed management to pursue a possible substantial issuer bid for an aggregate purchase price not exceeding C$50 million and a price per share not greater than C$1.92 (US$1.35), representing a 17.4% premium to the closing price of the company’s shares on Nasdaq on October 14, 2026. SNDL had 243,761,544 common shares issued and outstanding as of close of business on October 14, 2026. Any formal launch of the substantial issuer bid is subject to applicable exchange and cross-border regulatory approvals and would occur after the company reports third quarter earnings.

SNDL said it also intends to renew its share repurchase program, conducted by way of a normal course issuer bid, following its expiry on November 20, 2026, subject to board and applicable exchange and regulatory approvals. The company said that if it pursues the substantial issuer bid, the bid will not operate concurrently with the repurchase program, in accordance with applicable laws.

The company said the tender offer has not yet commenced, and there can be no assurances that it will commence the tender offer on the terms described or at all. On commencement, the company will file a tender offer statement on Schedule TO, including an offer to purchase and accompanying issuer bid circular, letter of transmittal and other tender offer materials, with the U.S. Securities and Exchange Commission and applicable Canadian securities regulatory authorities.

Strategic Update

SNDL said it has increased its indirect interest in Surterra Holdings, Inc. and certain of its affiliates, collectively Parallel, a U.S. vertically integrated cannabis operator, from approximately 67% to approximately 92% following a recently completed rights offering initiated by Parallel. The company said the increased ownership strengthens SNDL’s economic exposure to Parallel, provides Parallel with liquidity to execute on its near-term objectives and enhances SNDL’s strategic optionality as it evaluates its U.S. medical cannabis strategy, including potential future pathways toward integration of Parallel’s medical cannabis operations, subject to applicable legal, regulatory, accounting and Nasdaq requirements.

In Florida, SunStream is funding the acquisition and buildout of a wholly owned cultivation and processing facility in Gainesville, which the company said is intended to support cultivation, processing and manufacturing, finished-goods production and supply to Parallel’s Florida retail network.

SNDL said it is taking action to improve the profitability and focus of its Canadian cannabis operations, including a disciplined exit from what the company described as the unprofitable domestic dried flower category and a greater focus on higher-value products and opportunities. The company said near-term results may be impacted by one-time, primarily non-cash items associated with refocusing the portfolio, optimizing the operating footprint and addressing challenges experienced during the first half of the year.

The company also said it has reached an agreement in principle with the Alcohol and Gaming Commission of Ontario to resolve outstanding regulatory matters, subject to the completion of definitive documentation and the payment of a $200,000 fine. SNDL said the contemplated resolution is expected to provide a path toward normalized operations and renewed growth, supported by a transition to third-party financing and a modified franchise structure, with the contemplated structure resulting in the deconsolidation of associated retail revenue while preserving the company’s net economics.

SNDL said it expects to report its complete third quarter 2026 financial results in accordance with its previously announced reporting schedule.