Calgary, Alberta–(BUSINESS WIRE)–High Tide Inc. (“High tide“or the”Company”) (Nasdaq: HITI) (TSXV: HITI) (FSE: 2LYA), a leading retail-focused cannabis company with global physical and e-commerce assets, is pleased to announce that it is taking yet another step to expand its brick-and-mortar cannabis retail business, by entering into a definitive agreement (the “acquisition agreement”) under which High Tide will acquire four cannabis retail stores in Ontario (the “Stores”) under the name Crossroads Cannabis (“crossroads”), for 2.5 million Canadian dollars (the “Transaction”). Stores are located in Stratford, Woodstock, Hanover and Markdale. The Stratford store is located in a mall anchored by a national chain of discount grocery stores. The Woodstock store is located in a mall whose mainstay is a large national home improvement store. The Hannover store is located in a mall with many anchors, including national grocery chains and big box stores. The Markdale store is conveniently located right next to the provincial liquor retailer. For the three months ended December 31, 2021, Crossroads generated annualized revenues of C$7.6 million and annualized adjusted EBITDA1 of 0.7 million Canadian dollars. The purchase price represents 3.5 times annualized Adjusted EBITDA for the three months ended December 31, 2021.
“Since its inception, Crossroads has been a very popular cannabis retail brand in the communities it serves. The Stratford Crossroads location was the first to open in the city and has significant levels of goodwill from early customers in the community,” said Raj Grover, President and CEO of High Tide. “As consolidation in the Canadian cannabis retail space has accelerated, we have become the acquirer of choice. This has allowed us to be strategic in determining where to expand in Ontario, bringing our model innovative discount club to communities we have not yet been able to directly serve. The pandemic has resulted in longer delays in opening stores organically, and consolidating the retail landscape through accretive acquisitions, we maintain the momentum of overall store expansion. We expect to announce further retail store acquisitions in the near term as we move closer to our goal of reaching 150 stores by the end of of the 2022 calendar year. I welcome the Crossroads team as they join the High Tide family,” added Mr. Grover.
“Observing the maturity of the retail market in Ontario, it became clear to me that consolidation would be the path to true longevity. I have recognized the exceptional foresight and leadership of Raj and his dedicated team, and am delighted to now be associated with the future growth and success of High Tide and Canna Cabana,” said Robert Rowe, Sole Owner of Crossroads.
The transaction, which is an arm’s length transaction, is subject to, among other things, the receipt of the required approval from the TSX Venture Exchange (“TSXV”), approval from the Alcohol and Gaming Commission of Ontario and other customary closing conditions, is expected to complete in the coming weeks. The consideration (the “Consideration”) for the acquired stores will be C$2.5 million paid in High Tide common stock (“Actions at high tide“) at the closing of the Transaction (the “Closing”) based on a deemed price per High Tide share equal to the volume-weighted average price per High Tide share on the TSXV for the 10 consecutive trading days prior to closing. At closing, the stores will include $285,000 of inventory. Purchase price represents 3.5x annualized Adjusted EBITDA1 for the three months ended December 31, 2021. Including Crossroads stores, after closing High Tide will have at least 37 stores in Ontario and 115 stores nationally.
High Tide Shares issued pursuant to the Consideration will be subject to a statutory hold period of four months and one day from Closing.
Separately, the Company has now issued the shares which were disclosed in its February 18, 2022 press release.
ABOUT HIGH TIDE
High Tide is a leading retail-focused cannabis company with bricks-and-mortar and global e-commerce assets. The company is Canada’s largest recreational cannabis retailer by revenue, with 111 current locations in Ontario, Alberta, Manitoba and Saskatchewan. High Tide was named in Report on Business magazine’s third annual ranking of Canada’s Best Growth Companies of 2021, and was named one of the Top 10 Performing Stocks in Diversified Industries in the 2022 TSX Venture 50™. The company is also the first and only cannabis discount club retailer in North America, with Canna Cabana, Meta Cannabis Co. and Meta Cannabis Supply Co. banners, with additional locations under development across the country. High Tide’s portfolio also includes retail kiosks and Smart Locker Fastendr™ technology. High Tide has been serving consumers for over a decade through its established e-commerce platforms including Grasscity.com, Smokecartel.com, Dailyhighclub.com and Dankstop.com and more recently in the hemp-derived CBD space through Nuleafnaturals.com, FABCBD.com and BlessedCBD.co.uk, as well as its wholesale distribution division under Valiant Distribution, including the manufacturer of licensed entertainment products Famous Brandz. High Tide’s strategy as a parent company is to expand and strengthen its integrated value chain, while delivering a comprehensive customer experience and maximizing shareholder value.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
For more information on High Tide Inc., please visit www.hightideinc.com, its profile page on SEDAR at www.sedar.com and its profile page on EDGAR at www.sec.gov.
Crossroads is a family business and works hard to make all of its customers feel like part of the family. Their stores provide a clean and welcoming environment to help customers new to cannabis feel comfortable. Crossroads offers an industry-leading line of products at affordable and competitive prices. Their local staff are knowledgeable and passionate about cannabis and committed to helping customers navigate their journey.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this press release constitutes forward-looking statements under applicable securities laws. All statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by words such as “may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend” or the negative form of these similar terms and expressions. Forward-looking statements contained in this press release include statements relating to: High Tide entering into the transaction on the terms and within the time periods set forth in this press release; High Tide Receives Required Approvals for Transaction; the expected effects of the transaction on High Tide’s business and operations; Mr. Grover’s expectation to announce further retail acquisitions in the future; Mr. Grover’s statement regarding High Tide’s goal of reaching 150 stores by the end of calendar year 2022; and High Tide’s plans to expand and strengthen its integrated value chain, while delivering a comprehensive customer experience and maximizing shareholder value.
The forward-looking information contained in this press release is based on certain assumptions and expected future events, namely: that High Tide will have the ability to complete the transaction (and will have the ability to obtain all required approvals) under the terms and within the deadlines set by High Tide; High Tide’s financial condition and development plans do not change as a result of unforeseen events; there will always be demand and market opportunity for High Tide’s product offerings; current and future economic conditions will not affect High Tide’s business and operations or High Tide’s ability to take advantage of anticipated business opportunities), although considered reasonable by High Tide’s management at the time of preparation, may prove to be inaccurate and cause actual results to differ materially from those anticipated, and as such, undue reliance should not be placed on forward-looking statements.
These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements, including, but not to limit: the risks associated with the cannabis and CBD industries in general; the inability of High Tide to complete the transaction; High Tide’s inability to obtain required approvals, High Tide’s inability to pursue further store acquisitions in the future, High Tide’s inability to acquire more stores and reach 150 stores by the end of calendar year 2022, High Tide’s inability to expand and strengthen its integrated value chain, while delivering a comprehensive customer experience and maximizing shareholder value.
The forward-looking statements, forward-looking financial information and other measures presented herein are not intended to be indications or projections for the periods referenced herein or for any future period, and in particular, past performance is not a indicator of future results and the results of High Tide in this press release may not be indicative and does not constitute an estimate, forecast or projection of the future results of High Tide. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and are therefore subject to change thereafter. High Tide disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Factors that could cause anticipated opportunities to differ materially from actual results include, but are not limited to, the matters noted above and elsewhere in High Tide’s public filings and material change reports, which are and will be available on SEDAR.
This press release does not constitute an offer to sell or a solicitation of an offer to buy securities in the United States of America. The securities have not been and will not be registered under the United States Securities Act of 1933 (the “1933 Act”) or any state securities law and may not be offered or sold to United States or to United States Persons (as defined in the 1933 Act) unless registered under the 1933 Act and applicable state securities laws, or an exemption from such recording is available.
1 Adjusted EBITDA is a non-IFRS financial measure.