High Tide Inc. (NASDAQ:HITI) (TSXV:HITI) (FSE:2LYA) will acquire four operating retail cannabis stores in Ontario under the name Crossroads Cannabis, for CAD$2.5 million ($1,97 million). The stores are located in Stratford, Woodstock, Hanover and Markdale.
For the three months ended December 31, 2021, Crossroads generated annualized revenue of CAD$7.6 million and annualized Adjusted EBITDA of CAD$700,000. The purchase price represents 3.5x annualized Adjusted EBITDA for the three months ended December 31, 2021.
“Since its inception, Crossroads has been a very popular cannabis retail brand in the communities that it serves. The Stratford Crossroads location was the first to open in the city and has meaningful levels of goodwill from early customers in the community,” stated Raj Grover, president and CEO of High Tide. “As consolidation in the Canadian retail cannabis space has picked up steam, we have become the acquirer of choice.”
“We expect to announce more retail store acquisitions in the near term as we move towards our goal of reaching 150 stores by the end of calendar 2022. I would like to give a warm welcome to the Crossroads team as they join the High Tide family,” added Grover.
The transaction, which is an arm’s length transaction, is subject to, among other things, receipt of required TSX Venture Exchange approval, Alcohol and Gaming Commission of Ontario approval, and other customary conditions of closing, and it is expected to close in the coming weeks.
The consideration for the stores being acquired will be CAD$2.5 million paid in common shares of High Tide on the closing of the transaction on the basis of a deemed price per High Tide share equal to the volume weighted average price per High Tide share on TSXV for the 10 consecutive trading days preceding closing. On closing the stores will include $285,000 of inventory.
Including the Crossroads stores, following closing, High Tide will have at least 37 stores in Ontario and 115 stores nationwide. The High Tide shares issued pursuant to the consideration will be subject to a statutory hold period of four months and one day from closing.