- High Tide acquires another top e-commerce platform for its
portfolio which already includes 3 out of the top 5 most popular
e-commerce platforms for consumption accessories and totaled almost
100 million site visits across all platforms in 2020, including 2.5
million associated with DankStop.1
- High Tide gains access to DankStop's more than 200,000 email
subscribers and further bolsters its online presence by gaining
access to DankStop's almost 335,000 Instagram followers.
- Transaction is immediately accretive as DankStop generated
revenue over US$3 million during the
12 months ended April 30 2021, with
an EBITDA margin in the low double digits.
- Pro forma for the acquisition, High Tide's revenue run rate in
the U.S. is approximately CAD$55
million.
- High Tide adds an asset light business that is already a
supplier for its dropshipping catalogue, resulting in enhanced
efficiencies and vertical integration.
CALGARY, AB, July 20, 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 its pursuit to dominate the e-commerce
marketplace for consumption accessories and merchandise, especially
targeting the United States, has
attracted another leading retailer to join the High Tide family.
High Tide has entered into a definitive agreement (the
"Acquisition Agreement") pursuant to which High Tide
USA Inc., a wholly-owned U.S.
subsidiary of the Company will acquire 100% of the issued and
outstanding shares of DS Distribution Inc. ("DankStop"),
operating as DankStop.com for US$3.85
Million (the "Transaction").
"This acquisition is yet another example of how High Tide's U.S.
e-commerce infrastructure and network keep getting stronger.
Rolling multiple established e-commerce platforms into our network
is positioning us nicely to create numerous synergies and
efficiencies across our ecosystem. Along with this transaction, our
last two acquisitions have increased High Tide's social media reach
by leaps and bounds, giving us access to an invaluable potential
customer base," said Raj Grover, President and Chief Executive
Officer of High Tide. "Being vertically integrated in the
consumption accessories space and having access to the end consumer
will continue to result in our ability to make meaningful high
margin sales across all of our channels. Having already
commenced online cannabis sales in three Canadian provinces, and
already possessing an established customer network in place in the
U.S. positions us well to commence online cannabis sales and
cannabis subscription boxes in the United
States if and when federally permissible. It is for these
and many other reasons that I am delighted to welcome the DankStop
team to the High Tide family of companies," added Mr. Grover.
_________________________
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.
|
Strategic Highlights
With over 10 years of experience in the consumption accessories
sector, including through its subsidiaries Grasscity, Smoke Cartel
and Daily High Club, High Tide is constantly exploring
opportunities to further increase its share in the growing
consumption accessories market. The DankStop acquisition will be
immediately accretive and its growing base of over 200,000 email
subscribers provides High Tide with another sales channel on which
to sell its products, thus leveraging retail margins on its own
brands. The acquisition will also result in enhanced
efficiencies and vertical integration as DankStop is already a
supplier for High Tide's dropshipping catalogue. Although
currently operating in the hemp-derived CBD and consumption
accessories space, High Tide intends to expand its cannabis retail
network into the United States in
the event of federal legalization, through cannabis subscription
boxes, mature e-commerce sites and bricks and mortar
locations. The work of launching consumption accessories and
hemp-derived cbd subscription boxes across all platforms has begun
and High Tide will continue to optimize and integrate these
platforms throughout the year. Upon closing of the
transaction DankStop co-founder Feliks
Khaykin and director Gabe
Aronovich will be joining the High Tide team with Feliks
taking on the role of Director of U.S. Operations and Gabe coming
on as Director of U.S. Business Development.
Transaction Details
The Transaction, which is an arm's length transaction, is
subject to, among other things, receipt of required TSX Venture
Exchange ("TSXV") approval, and other customary conditions
of closing, is expected to close in the coming weeks. Pursuant to
the terms of the Transaction, High Tide USA Inc., a Nevada corporation and a wholly-owned
subsidiary of High Tide, will purchase 100% of the issued and
outstanding shares of DankStop. The consideration for the 100% of
DankStop acquired will be US$3.85
Million (the "Consideration") in common shares of
High Tide ("High Tide Shares") on the basis of 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 preceding closing of the Transaction
("Closing"). Upon closing, DankStop will have approximately
US$100,000 of cash and non-cash
working capital and inventory of approximately US$220,000. Following the completion of the
Transaction, DankStop will continue its corporate existence under
the state of Delaware as a 100%
owned subsidiary of High Tide USA
Inc.
"I'm truly excited to be joining the High Tide team and to begin
overseeing High Tide's U.S. business development initiatives," said
Gabe Aronovich. "The synthesis of
High Tide's expansive e-commerce and manufacturing capabilities
with DankStop's vast subscriber base and social media presence will
solidify High Tide's position as the global leader in the online
consumption accessory market, and I could not be more delighted to
be part of the High Tide family," added Mr. Aronovich.
The Transaction has been unanimously approved by the board of
directors of High Tide and DankStop. The High Tide Shares issued
pursuant to the Consideration are subject to a statutory hold
period of four months and one day.
ABOUT DankStop
DankStop is a leading online consumption accessories retailer.
With an industry leading and innovative website, and dedicated
support team, DankStop has raised the bar for the online
consumption supply industry since 2014. Leveraging its in-house
technology, DankStop now offers a variety of B2B services for the
Cannabis industry in addition to its retail websites ranging from
drop shipping to third party logistics. Information on the Company
and its many products can be accessed
through: www.DankStop.com.
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 87
current locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide's retail segment
features the Canna Cabana, 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 numerous consumption
accessory businesses including e-commerce platforms Grasscity.com,
Smoke Cartel and CBDcity.com, and 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. (NYSE:ACB) (TSX: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
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 Company's bolstering of its online
presence as a result of the Transaction; the Company enhancing
efficiencies in vertical integration as a result of the
Transaction; the Transaction being immediately revenue-accretive;
the Company's ability to close the Transaction; the strengthening
of the Company's e-commerce infrastructure; the Company's increased
social media reach as a result of the Transaction; the Company's
ability to continue to make meaningful sales across its various
e-commerce channels; the Company's continued exploration of various
opportunities in the consumption accessories market; the Company's
ability to leverage retail margins on its own brands; the ability
of the Company to expand its cannabis retail network into
the United States; the continued
optimization and integration of the Company's various e-commerce
platforms throughout the coming year; statements with respect to
Felix Khaykin and Gabe Aronovich joining the Company as Director
of U.S. Operations and Director of U.S. Business Development,
respectively; and receipt of TSXV and/or other regulatory approval
of the Transaction.
Forward-looking information in this news release are based on
certain assumptions and expected future events, namely: the
Company's ability to continue as a going concern; the continued
commercial viability and growth in popularity of cannabis and
cannabis consumption accessories; continued approval of the
Company's activities by the relevant governmental and/or regulatory
authorities; the continued growth of the Company; the Company's
ability to finance the Transaction; the receipt of shareholder
approval with respect to the Transaction; the receipt of TSXV
and/or other regulatory approval of the Transaction; the continued
growth in popularity of the online retail/distribution of cannabis
consumption accessories; the continued ability of DankStop to
generate revenue; the ability of the Company to integrate DankStop
into its current suite of e-commerce channels; and the ability of
the Company's to effectively integrate and capitalize on DankStop's
social media presence.
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 potential inability of the Company to continue as a going
concern; the risks associated with the cannabis and cannabis
consumption accessory industry in general; increased competition in
the cannabis retail and cannabis consumption accessory market; the
potential future unviability of the cannabis retail and cannabis
consumption accessory market; incorrect assessment of the value and
potential benefits of the Transaction; risks associated with
potential governmental and/or regulatory action with respect to the
cannabis retail and cannabis consumption accessory market; risks
associated with a potential collapse in the value of cannabis and
cannabis consumption accessories; risks associated with the
Company's potential inability to attain shareholder, TSXV and/or
other regulatory approval with respect to the Transaction; risks
associated with the Company's ability to continue generating a
profit; risks associated with the Company's potential inability to
finance the Transaction; the Company's potential inability to
achieve efficiencies in vertical integration as a result of the
Transaction; the Transaction not being revenue-accretive; the
potential inability of the Company to strengthen its e-commerce
infrastructure; the failure to increase social media reach as a
result of the Transaction; the Company's inability to continue to
make meaningful sales across its various e-commerce channels; the
Company's potential inability to continue its exploration of
various opportunities in the consumption accessories market; the
Company's potential inability to leverage retail margins on its own
brands; the potential inability of the Company to expand its
cannabis retail network into the United
States; the inability of the Company to optimize and
integrate the Company's various e-commerce platforms throughout the
coming year; and the potential inability of the Company to appoint
Felix Khaykin and Gabe Aronovich as Director of U.S. Operations
and Director of U.S. Business Development, respectively.
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.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement and reflect the
Company's expectations as of the date hereof and are subject to
change thereafter. The Company undertakes no obligation to update
or revise any forward-looking statements, whether as a result of
new information, estimates or opinions, future events or results or
otherwise or to explain any material difference between subsequent
actual events and such forward-looking information, except as
required by applicable law.
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.