- 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.
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.
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 and Smokecartel.com, and more recently in the
hemp-derived CBD space through CBDcity.com, FABCBD.com,
Dailyhighclub.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.
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.
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.
2 Adusted EBITDA is a non-IFRS financial measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210720006018/en/
Media Inquiries Omar Khan Senior Vice President, Corporate and
Public Affairs omar@hightideinc.com
Investor Inquiries Vahan Ajamian Capital Markets Advisor
vahan@hightideinc.com
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