CALGARY, AB – High Tide Inc. has entered into a definitive asset purchase agreement dated June 25, 2024 pursuant to which High Tide will acquire a retail cannabis store in Mississauga, Ontario, currently operating as Cantopia for $600,000. The store is situated in a bustling retail plaza surrounded by several small businesses. It is adjacent to an internationally recognized quick-serve restaurant and is steps away from a national discount retailer and a Canadian discount grocery chain.
For the trailing three months ended May 31, 2024, the store generated annualized revenue of $2.3 Million and annualized Adjusted EBITDA of $0.4 Million. The purchase price represents 1.5x annualized Adjusted EBITDA for the trailing three months ended May 31, 2024.
“High Tide has always been focused on quality over quantity when looking at M&A opportunities, and this acquisition is another example of our targeted strategy. Since the end of calendar 2022, we have been focusing on greenfield growth, adding 24 locations organically with effectively no M&A. As it has been and continues to be a buyers’ market, we have been patient pursuing only the highest quality opportunities while not chasing any deals or giving into unrealistic seller’s expectations, unlike some of our peers,” said Raj Grover, Founder and Chief Executive Officer of High Tide.
“As the Canadian retail cannabis market is going through heightened consolidation, many operators are assessing the current macro conditions and the limited options available to them. Joining the High Tide family allows these retailers to weather the storm while providing us with fully operational sites with strong revenues for reasonable multiples. I am pleased to add another highly accretive store to our outstanding retail portfolio and look forward to more strategic and accretive M&A as the opportunities arise,” added Mr. Grover.
All figures are expressed in Canadian dollars unless otherwise noted.
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, Alcohol and Gaming Commission of Ontario approval, and other customary conditions of closing, is expected to close in the coming weeks. The Consideration for the Stores being acquired will be $600,000 paid in cash on the closing of the Transaction. The purchase price represents 1.5x annualized Adjusted EBITDA for the three months ended May 31, 2024.
From the Consideration, an amount equal to approximately $150,000 will be held in escrow for a period of twelve months by High Tide’s lawyers to satisfy Cantopia’s indemnity with respect to possible claims based on breaches of representation and warranties.
ABOUT HIGH TIDE
High Tide, Inc. is a leading community-grown, retail-forward cannabis enterprise engineered to unleash the full value of the world’s most powerful plant and is the second-largest cannabis retailer in North America by store count. High Tide (HITI) is uniquely-built around the cannabis consumer, with wholly-diversified and fully-integrated operations across all components of cannabis.
High Tide was named one of Canada’s Top Growing Companies in 2021, 2022 and 2023 by the Globe and Mail’s Report on Business Magazine, and was named as one of the top 10 performing diversified industries stocks in both the 2022 and 2024 TSX Venture 50. High Tide was also ranked number one in the retail category on the Financial Times list of Americas’ Fastest Growing Companies for 2023.
