VANCOUVER, BC – Kiaro Holdings Corp. (TSXV: KO) (“Kiaro” or the “Company”), a national omni-channel cannabis retailer and wholesale distributor, is pleased to announce that the Company has entered into a definitive agreement with Aegis Brands Inc. (“Aegis”) to acquire all the issued and outstanding shares of its subsidiary, 2734524 Ontario Inc. (dba Hemisphere Cannabis Co, “Hemisphere”), which currently operates 7 excellent retail locations in Ontario (the “Existing Locations”) and two more locations in development (the “Transaction”). Completion of the Transaction will more than double Kiaro’s retail footprint and give it a significant presence in the Ontario retail cannabis market.
The total initial purchase price in connection with the Transaction will be settled by the issuance of 61,300,000 common shares of Kiaro (“Kiaro Shares”) and warrants of Kiaro (the “Kiaro Warrants”) to acquire up to additional 6,700,000 Kiaro Shares, subject to customary adjustments. Aegis shall also be entitled to receive a further 6,700,000 Kiaro Shares on achievement of certain commercial milestones within the first year following closing.
KEY TRANSACTION HIGHLIGHTS INCLUDES NEW EXPECTED REVENUE RUN RATE OF $42.7 MILLION
Substantial increase in Kiaro’s retail network: The Transaction provides Kiaro with new revenue from 7 open and operational stores with 2 more Retail Store Authorizations in process. As a result, we expect Kiaro’s annual run rate revenue to increase to $42.7M with a gross margin of $13.7M immediately following closing.
Amplifies Kiaro’s strategic entry into Ontario: With multiple locations in diverse municipalities in Ontario, the Transaction will allow Kiaro to establish a significant presence in the Ontario cannabis retail market.
Executes on the plan of revenue and EBITDA growth through acquisition: The portfolio adds to Kiaro’s cash generating assets while providing expected additional high margin revenue streams.
In connection with the Transaction, Kiaro is excited to announce that Jenn Juby, Vice President of Retail at Hemisphere, will join the Kiaro team in the same capacity. Ms. Juby will contribute to the integration of the new stores into the Company and will use her expertise to continue the implementation of Kiaro’s retail experience.
Daniel Petrov, Chief Executive Officer of Kiaro stated, “The acquisition of Hemisphere is simply transformational. I expect this transaction will be significantly accretive for shareholders as we push forward towards $50M in target revenue. It brings up to 18 stores into operation by the end of the fiscal year and cements a strategic partnership with retail industry titans at Aegis Brands. Their team has assembled a superior Ontario portfolio of well-positioned brick and mortar locations, supporting our objective of exponential revenue and EBITDA growth.”
“The retail cannabis space is changing rapidly in Canada. We recognize the need for scale and focus to ensure success in this sector. As such we are thrilled to forge a partnership with Kiaro to build a cannabis retailer with a prominent nationwide presence and a clear path to $50 million in annual revenue,” said Steven Pelton, President and CEO of Aegis Brands. “The strategic alignment between two likeminded Canadian brands will serve to elevate the customer experience, while bolstering growth and profitability in the combined company,” said Pelton.
The Transaction is subject to applicable regulatory approvals including, but not limited to, the Alcohol and Gaming Commission of Ontario and TSX Venture Exchange approval and the satisfaction of certain other closing conditions customary in transactions of this nature.
It is anticipated that, subject to receipt of all regulatory and other applicable approvals, the Transaction is expected to complete in September 2021.
This press release is available on the Kiaro Verified Forum On AGORACOM for shareholder discussion and management engagement.
Kiaro Holdings Corp.
Based in Vancouver, British Columbia, Kiaro is an independent, omni-channel cannabis retailer and distributor. Through existing storefronts across British Columbia, Saskatchewan and Ontario, a wholesale distribution division servicing Saskatchewan, ecommerce sites in Canada, the US and Australia, and plans for continued national expansion, Kiaro is driven to introduce new and experienced consumers to a lifelong exploration of cannabis. With more than 50 years of collective retail-focused experience, Kiaro’s leadership team has a proven track record of growing retail brands across North America and plans to open multiple retail locations nationwide over the coming years.
Aegis Brands Inc.
Aegis Brands Inc. owns and operates a portfolio of brands currently consisting of Bridgehead and Hemisphere Cannabis Co. For more information, please visit www.aegisbrands.ca or find the Company on Facebook and Twitter.