- This closing represents High Tide’s largest acquisition
to-date, 6th global e-commerce related acquisition in 2021, and 3rd
in the CBD space, taking international revenue from approximately
CAD$10.6 million at October 31, 2020 to approximately CAD$80
million annual run-rate as of today.
- NuLeaf has a strong financial profile which generated 71%
gross margins and 25% Adjusted EBITDA1 margins in 2020.
- Highly accretive transaction for shareholders, as NuLeaf
generated revenue of US$19.4 Million and US$5.26 Million in
Adjusted EBITDA1 for the 12 months ended September 30,
2021.
- High Tide’s internationally-diversified portfolio generates
meaningful Adjusted EBITDA1, which provides the Company with an
advantage when competing for bricks-and-mortar market share in
Canada.
- Co-founders Bo Shirley and Jaden Barnes retain 20% ownership
of NuLeaf, and have taken on consulting roles with High Tide to
assist the Company’s continued expansion in the United States and
globally.
- High Tide intends to use NuLeaf’s cGMP-certified facility to
produce licensed THC-infused edible and drinkable products, as U.S.
federal regulations permit.
High Tide Inc. (“High Tide” or the “Company”)
(TSXV: HITI) (NASDAQ: HITI) (FSE: 2LYA), a leading retail-focused
cannabis company with bricks and mortar as well as global
e-commerce assets, is pleased to announce, that further to its
press release dated November 22, 2021, the Company has completed
its acquisition (the “Acquisition”) of an 80% interest in
NuLeaf Naturals, LLC (“NuLeaf”) for US$31,240,000 (the
“Transaction”), and will have a three-year option to acquire
the remaining 20% of NuLeaf at any time.
Founded in 2014 with its headquarters in Denver, Colorado,
NuLeaf is a market leader focused on the production and
distribution of premium cannabinoid wellness products. It has
received over 25,000 verified 5 star customer reviews through its
e-commerce platform. NuLeaf can produce 60,000 plant-based softgels
per hour and is one of only a few manufacturers in the United
States that can produce a vegan softgel. With a heightened consumer
interest in health focused and sustainable products, plant-based
offerings are primed for growth. NuLeaf has a strong distribution
reach in the natural products channel and recently secured an
expansion with Sprouts Farmers Market from 33 retail locations to
an additional 235 stores. It has quickly grown to become one of the
most popular brands for premium cannabinoid wellness products
across the U.S., with their product portfolio including
Multicannabinoid™ tinctures, softgels, and topicals. Over the 12
months ended September 30, 2021, NuLeaf had over 5.1 million site
visits2 and an average order value of US$120. Since its inception,
NuLeaf has served approximately 330,000 unique customers through
its e-commerce platform, and hundreds of thousands more through
their other distribution channels. Upon closing, NuLeaf will have
approximately US$500,000 of inventory and approximately US$500,000
of cash.
This is High Tide’s sixth acquisition in the global e-commerce
space, and third in the CBD space, in 2021. These transactions have
collectively contributed to increasing the Company’s annual
run-rate international revenue from approximately $10.6 million at
the end of October 31, 2020, to just approximately $80 million
annual run-rate at the end of November 30, 2021.
The Acquisition was completed pursuant to the terms of a
definitive agreement (the “Acquisition Agreement”), a copy
of which is available on the Company’s SEDAR profile. High Tide
acquired 80% of NuLeaf for 4,429,809 common shares of High Tide
(each a “High Tide Share”) valued at US$31,243,000 (the
“Consideration”), on the basis of a deemed price of
US$7.0529 per High Tide Share, being equal to the volume weighted
average price per High Tide Share on the Nasdaq for the ten
consecutive trading days preceding the closing of the
Acquisition.
The High Tide Shares issued pursuant to the Consideration are
subject to a hold period of four months and one day.
In addition to the foregoing, NuLeaf’s owners have agreed to
grant High Tide an option to acquire all the remaining interest in
NuLeaf not held by High Tide, and become the sole owner of NuLeaf
(the “Call Option”), at an enterprise value equal to the
trailing twelve (12) months of Adjusted EBITDA1 at that time
multiplied by 7.1. The Call Option will be exercisable at any time
for a period of three (3) years following the Acquisition. In
addition, High Tide has agreed to grant NuLeaf’s owners an option
to put to High Tide the remaining interest in NuLeaf not held by
High Tide (the “Put Option”), at the same enterprise value
of the Call Option. The Put Option will be exercisable by NuLeaf’s
owners for a period of eighteen (18) months following the eighteen
(18) month anniversary of the Closing of the Acquisition. The
consideration under the Call Option or Put Option, if exercised,
will be satisfied in cash.
KPMG LLP conducted financial due diligence on behalf of High
Tide for the Transaction. Garfinkle Biderman LLP and Sichenzia Ross
Ference LLP acted for High Tide in connection with the Transaction.
NuLeaf was advised by Squire Patton Boggs (US) LLP and Class VI
Partners, LLC in connection with the Transaction.
In connection with the closing of the Transaction, High Tide
granted 60,000 stock options (the “Options”) to employees
and consultants of NuLeaf, exercisable at CAD$8.02 per High Tide
Share for a period of 3 years.
OPENING OF 105TH RETAIL CANNABIS STORE
High Tide also announced today that its Canna Cabana retail
cannabis store located at 3928 Edmonton Trail NE in Calgary,
Alberta, has begun selling recreational cannabis products for adult
use. This opening represents High Tide’s 105th branded retail
location across Canada, and 59th in Alberta, selling recreational
cannabis products and consumption accessories. The new Canna Cabana
store is located within the community of Highland Park, providing
convenient access for residents of numerous nearby communities in
north-central Calgary, as well as for employees who work in
adjacent employment centres which include several industrial sites.
The location is also easily-accessible from Deerfoot Trail, which
is Calgary’s most heavily-used freeway.
ABOUT NULEAF NATURALS
NuLeaf Naturals is one of America’s leading cannabinoid
companies. Since 2014, NuLeaf has been committed to creating the
world’s highest quality cannabinoid products in their most pure and
potent form. NuLeaf’s products are produced at a cGMP-certified
facility enabling them to manufacture groundbreaking cannabinoid
formulations while exceeding the highest levels of regulatory
compliance. The company is committed to creating safe, consistent,
and effective products and has proudly received over 25,000
verified 5-star customer reviews through their e-commerce platform.
NuLeaf also ranked sixteenth on the prestigious 2020 Inc 5000 list
of the fastest-growing private companies in the United States, with
a remarkable three-year growth rate of 11,495 percent.
ABOUT HIGH TIDE
High Tide is a leading retail-focused cannabis company with
bricks-and-mortar as well as global e-commerce assets. The Company
is the largest Canadian retailer of recreational cannabis as
measured by revenue, with 105 current locations spanning Ontario,
Alberta, Manitoba and Saskatchewan, and was featured in the third
annual Report on Business Magazine’s ranking of Canada’s Top
Growing Companies in 2021. The Company is also North America’s
first and only cannabis discount club retailer, featuring Canna
Cabana, Meta Cannabis Co., and Meta Cannabis Supply Co. banners,
with additional locations under development across the country.
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, BlessedCBD.co.uk, and CBDcity.com, as well as its
wholesale distribution division under Valiant Distribution,
including the licensed entertainment product manufacturer Famous
Brandz. High Tide’s strategy as a parent company is to extend and
strengthen its integrated value chain, while providing a complete
customer experience and maximizing shareholder value. Key industry
investors in High Tide include Tilray Inc. (TSX: TLRY) (Nasdaq:
TLRY) and Aurora Cannabis Inc. (TSX: ACB) (Nasdaq: ACB).
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 about 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This news release contains “forward-looking statements” within
the meaning of applicable securities laws. All statements contained
herein that are not clearly historical in nature may constitute
forward-looking statements.
Generally, such forward-looking information or forward-looking
statements can be identified by the use of forward-looking
terminology such as “plans”, “expects” or “does not expect”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates” or “does not anticipate”, or “believes”,
or variations of such words and phrases or may contain statements
that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “will continue”, “will occur” or “will
be achieved”. The forward-looking information and forward- looking
statements contained herein include, but are not limited to,
statements regarding: the ability of High Tide to exercise their
Call Option to purchase the remaining 20% of NuLeaf; the ability of
NuLeaf to exercise their Put Option; the ability of NuLeaf to
produce 60,000 plant-based softgels per hour; the growth of the
plant-based cannabis products market; and the ability of NuLeaf to
complete its planned expansion with Sprouts Farmers Market from 33
to an additional 235 stores.
Forward-looking information in this news release are based on
certain assumptions and expected future events, namely: that upon
completion of the Transaction, High Tide’s financial condition and
development plans do not change as a result of unforeseen events;
there will continue to be a demand, and market opportunity, for
High Tide’s product offerings; NuLeaf will have the stated working
capital upon closing of the Transaction; either the Call or Put
Option will be exercise; High Tide’s annual run-rate will increase
to $80,000,000 and current and future economic conditions will
neither affect the business and operations of High Tide nor High
Tide’s ability to capitalize on anticipated business
opportunities). Although considered reasonable by management of
High Tide at the time of preparation, these assumptions may prove
to be imprecise and result in actual results differing 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 limited to: the risks
associated with the cannabis and CBD industries in general; risks
associated with potential legislative and/or regulatory changes by
the relevant governmental and/or regulatory bodies; risk that the
Company’s annual run-rate will not increase to $80,000,000; the
inability of High Tide to exercise its option to purchase the
remaining 20% of NuLeaf; the inability of NuLeaf to produce 60,000
plant-based softgels per hour; a lack in growth in the plant-based
cannabis products market; and the inability of NuLeaf to complete
its planned expansion with Sprouts Farmers Market from 33 to an
additional 235 stores.
Readers are cautioned that the foregoing list is not exhaustive.
Readers are further cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those
anticipated.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy any of the 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 laws and may not be offered or
sold within the United States or to U.S. Persons (as defined in the
1933 Act) unless registered under the 1933 Act and applicable state
securities laws, or an exemption from such registration is
available.
___________________________
1 Adjusted EBITDA (earnings before interest, taxes,
depreciation, and amortization) does not have a standardized
meaning prescribed by IFRS.
2 Data from Google Analytics.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211129005237/en/
Media Inquiries Omar Khan Senior Vice President - Corporate and
Public Affairs High Tide Inc. omar@hightideinc.com
Investor Inquiries Vahan Ajamian Capital Markets Advisor High
Tide Inc. vahan@hightideinc.com
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