Acquisition Cements High Tide's Position as
Leader Within U.S. E-commerce
Marketplace for Consumption Accessories
- High Tide adds another top e-commerce platform to its portfolio
which will now include 3 out of the top 5 most popular e-commerce
platforms for consumption accessories globally totaling 91 million
site visits in 2020, including 23 million associated with Daily
High Club alone.1
- High Tide gains access to Daily High Club's over 15,000
subscription box members who are ideal customers for High Tide to
potentially launch cannabis subscription boxes in the event of U.S.
federal legalization.
- High Tide bolsters its online presence, by gaining access to
Daily High Club's almost 800,000 followers on Instagram and over
75,000 followers on TikTok.
- With over one million accessories sold under the Daily High
Club name, High Tide adds a company to its portfolio with proven
brand equity.
- Transaction is immediately accretive as Daily High Club
generated US$9.4 million in net
revenue and US$1.2 million in EBITDA
during the 12 months ended April
2021.
- Pro forma for the acquisition, High Tide's revenue run rate in
the U.S. exceeds CAD$50 million.
CALGARY, AB, July 6, 2021 /CNW/ - High Tide Inc. ("High
Tide" or the "Company") (TSXV: HITI) (Nasdaq: HITI)
(FRA: 2LYA), a retail-focused cannabis corporation enhanced by the
manufacturing and distribution of consumption accessories, is
pleased to announce that it has completed the acquisition of DHC
Supply LLC (the "Acquisition") operating as Daily High Club
("Daily High Club").
The Acquisition was completed pursuant to the terms of the
merger agreement (the "Acquisition Agreement") previously
announced by the Company on June 25,
2021, pursuant to which High Tide USA Inc., a Nevada corporation and a wholly-owned U.S.
subsidiary of the Company ("Subco"), has acquired 100% of
the issued and outstanding shares of Daily High Club.
Pursuant to the terms of the acquisition, the total
consideration to Daily High Club shareholders for all the issued
and outstanding securities of Daily High Club is: (i) 839,820
common shares of High Tide ("High Tide Shares") valued at
US$6.75 Million (the "Share
Consideration") on the basis of a deemed price per High Tide
Share of CAD$9.92, being equal to the
volume weighted average price per High Tide Share on the TSX
Venture Exchange for the 10 consecutive trading days preceding the
closing of the Transaction ("Closing"); and (ii)
US$3.25 million in cash (collectively
with the Share Consideration, the "Consideration").
In connection with the Closing, Harrison
Baum, Chief Executive Officer of Daily High Club, has joined
the High Tide team as Director of Digital Marketing to oversee all
social media initiatives for High Tide globally.
The High Tide Shares issued pursuant to the Share Consideration
are subject to a statutory hold period of four months and one day.
In addition, the High Tide Shares having a value of 25% of the
Consideration will be held in escrow to insure certain
indemnification obligations if claims arise.
Furthermore, High Tide granted 13,333 stock options (the
"Options") to Harrison Baum,
exercisable at CAD$9.39 per High Tide
Share for a period of three years.
_____________________________________
1 As of June 21st, 2021, based on analytics data provided by
Alexa Internet, Inc. related to Grasscity, SmokeCartel and Daily
High Club. Traffic data provided by Google Analytics.
|
ABOUT DHC SUPPLY LLC
With over one million consumption accessories sold and over
15,000 subscribers, Daily High Club is one of the leading online
retailers of glass water pipes, vaporizers, and other in demand
consumption accessories. Daily High Club provides a marketplace
with a wide variety of high-quality products and subscription
boxes. Daily High Club has an active social media presence with
numerous influencer and celebrity endorsements including deals with
Tommy Chong, Chanel West Coast and
more. Daily High Club boasts over 800,000 followers on Instagram
and 75,000 followers on TikTok. The company's website at
www.dailyhighclub.com offers an engaging and fun shopping
experience.
ABOUT HIGH TIDE
High Tide is a retail-focused cannabis company enhanced by the
manufacturing and distribution of consumption accessories. The
Company is the most profitable Canadian retailer of recreational
cannabis as measured by Adjusted EBITDA,2 with 89
current locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide's retail segment
features the Canna Cabana, KushBar, Meta Cannabis Co., Meta
Cannabis Supply Co. and NewLeaf Cannabis 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 and
Dailyhighclub.com, and more recently in the hemp-derived CBD space
through CBDcity.com and FABCBD.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.
____________________________________
2 Adjusted EBITDA is a non-IFRS financial measure.
|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this news release constitutes
forward-looking statements under applicable securities laws. Any
statements that are contained in this news release that are not
statements of historical fact may be deemed to be forward-looking
statements. Forward-looking statements are often identified by
terms such as "may", "should", "anticipate", "expect", "potential",
"believe", "intend" or the negative of these terms and similar
expressions. Forward-looking statements in this news release
include statements relating to the potential effects of the
Acquisition on the business of High Tide, including the expectation
that the Acquisition will position High Tide to begin online
cannabis sales in the United
States should federal legalization occur in the United States; and receipt of all
requisite regulatory approval, including from the TSXV and Nasdaq.
While High Tide considers these assumptions to be reasonable, based
on information currently available, they may prove to be incorrect.
Readers are cautioned not to place undue reliance on
forward-looking statements.
Forward-looking statements also necessarily involve known and
unknown risks, including, without limitation, risks associated with
general economic conditions; adverse industry events; marketing
costs; loss of markets; future legislative and regulatory
developments involving the retail cannabis markets; inability to
access sufficient capital from internal and external sources,
and/or inability to access sufficient capital on favourable terms;
the retail cannabis industries generally; income tax and regulatory
matters; the ability of High Tide to implement its business
strategy; competition; currency and interest rate fluctuations; the
COVID-19 pandemic nationally and globally and the response of
governments to the COVID-19 pandemic in respect of the operation of
retail stores and other risks. Readers are 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. Readers are further cautioned that the
assumptions used in the preparation of such forward-looking
statements (including, but not limited to, the assumption that (i)
High Tide's financial condition and development plans do not change
as a result of unforeseen events, (ii) there will continue to be a
demand, and market opportunity, for High Tide's product offerings,
(iii) 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, 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.
Forward-looking statements, forward-looking financial
information and other metrics presented herein are not intended as
guidance or projections for the periods referenced herein or any
future periods, and in particular, past performance is not an
indicator of future results and the results of High Tide in this
press release may not be indicative of, and are not an estimate,
forecast or projection of High Tide future results. Forward-looking
statements contained in this news release are expressly qualified
by this cautionary statement and reflect our expectations as of the
date hereof, and thus are subject to change thereafter. High Tide
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. Factors that
could cause anticipated opportunities and actual results to differ
materially include, but are not limited to, matters referred to
above and elsewhere in High Tide's public filings and material
change reports, which are and will be available on SEDAR.
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.
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SOURCE High Tide Inc.