- High Tide adds another top e-commerce platform to its portfolio
which will now include 3 out of the top 5 most popular e-commerce
platforms for consumption accessories globally totaling 91 million
site visits in 2020, including 23 million associated with Daily
High Club alone.1
- High Tide gains access to Daily High Club's over 15,000
subscription box members who are ideal customers for High Tide to
potentially launch cannabis subscription boxes in the event of U.S.
federal legalization.
- High Tide bolsters its online presence, by gaining access to
Daily High Club's almost 800,000 followers on Instagram and over
75,000 followers on TikTok.
- With over one million accessories sold under the Daily High
Club name, High Tide adds a company to its portfolio with proven
brand equity.
- Transaction is immediately accretive as Daily High Club
generated US$9.4 million in net
revenue and US$1.2 million in EBITDA
during the 12 months ended April
2021.
- Pro forma for the acquisition, High Tide's revenue run rate in
the U.S. exceeds CAD$50 million.
CALGARY, AB, June 25, 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 it is taking another step towards
solidifying itself as the leader within the U.S. e-commerce
marketplace for consumption accessories by entering 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 DHC Supply LLC (the
"Transaction") operating as Daily High Club ("Daily High
Club").
"In alignment with our intention to become a dominant player in
the U.S. e-commerce marketplace through a combination of organic
growth and accretive acquisitions, specifically targeting
businesses with strong brand loyalty, I am thrilled to announce the
acquisition of Daily High Club," said Raj Grover, President and
Chief Executive Officer of High Tide. "Daily High Club stood out to
us because it is an increasingly popular consumption accessories
online retailer, with a rapidly growing subscription box model
which can easily be tailored to include cannabis products in the
event of U.S. federal legalization. This subscription box model is
complementary to our existing accessories e-commerce portfolio, and
as such creates numerous opportunities for potential synergies.
It's my pleasure to welcome Harrison and the DHC team into our High
Tide family," added Mr. Grover.
"I am extremely excited to be joining the High Tide team and see
a huge opportunity to boost High Tide's brands the same way we
built our loyal following for Daily High Club," said Harrison Baum, Founder and Chief Executive
Officer of Daily High Club. "Daily High Club's social media
dominance, coupled with High Tide's vast manufacturing capabilities
and mature e-commerce platforms should yield meaningful synergies.
I could not be more thrilled to be part of the High Tide family,"
added Mr. Baum.
_______________
|
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 cannabis accessory
sector, including through our subsidiaries Grasscity and Smoke
Cartel, High Tide is constantly exploring opportunities to further
increase its share in the growing consumption accessories market.
Daily High Club's consumption accessories subscription box model,
with over 15,000 and growing active monthly subscribers, allows the
Company to ensure this Transaction will be immediately accretive
through cross-selling opportunities, and offering subscription box
memberships across its other e-commerce platforms, including
Grasscity.com and Smokecartel.com. Although currently operating in
the hemp-derived CBD and consumption accessory space, High Tide
intends to expand its cannabis retail network into the U.S. in the
event of federal legalization, through cannabis subscription boxes,
mature e-commerce sites and bricks and mortar locations.
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 around the end of June 2021. Pursuant to the terms of the
Transaction, High Tide USA Inc.
("Subco"), a Nevada
corporation and a wholly-owned subsidiary of High Tide, will
acquire 100% of the issued and outstanding shares of Daily High
Club.
Total consideration to Daily High Club shareholders will be
US$10 million and Daily High Club is
expected to have approximately US$0.8
million of cash on closing. The consideration will be
comprised of: (i) US$6.75 Million
(the "Share 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 Nasdaq for the 10 consecutive trading days preceding
the closing of the Transaction ("Closing"); and (ii)
US$3.25 million in cash (collectively
with the Share Consideration, the
"Consideration").
In connection with the Transaction, High Tide is excited to
announce that Harrison Baum will be
joining the High Tide team on Closing as Director of Digital
Marketing to oversee all social media initiatives for High Tide
globally.
The Transaction has been unanimously approved by the board of
directors/managers of each of High Tide and Daily High Club. The
High Tide Shares issued pursuant to the Share Consideration
are subject to a statutory hold period of four months and one
day. In addition, shares having a value of 25% will be held
in escrow to insure certain indemnification obligations if claims
arise.
ABOUT DHC SUPPLY LLC
With over one million consumption accessories sold and over
15,000 subscribers, Daily High Club is one of the leading online
retailers of glass water pipes, vaporizers, and other in demand
consumption accessories. Daily High Club provides a marketplace
with a wide variety of high-quality products and subscription
boxes. Daily High Club has an active social media presence with
numerous influencer and celebrity endorsements including
deals with Tommy Chong, Chanel
West Coast and more. Daily High Club boasts over 800,000
followers on Instagram and 75,000 followers on TikTok. The
company's website at www.dailyhighclub.com offers an engaging and
fun shopping experience.
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, KushBar, 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 established
e-commerce platforms including Grasscity.com and Smokecartel.com,
and more recently in the hemp-derived CBD space through CBDcity.com
and FABCBD.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.
______________
|
2
Adjusted EBITDA is a non-IFRS financial measure.
|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this news release constitutes
forward-looking statements under applicable securities laws. Any
statements that are contained in this news release that are not
statements of historical fact may be deemed to be forward-looking
statements. Forward-looking statements are often identified by
terms such as "may", "should", "anticipate", "expect", "potential",
"believe", "intend" or the negative of these terms and similar
expressions. Forward-looking statements in this news release
include statements relating to High Tide's intention and ability to
complete the Transaction on the terms and conditions set out in the
Acquisition Agreement; the potential effects of the Transaction on
the business of High Tide, including the expectation that the
Transaction will position High Tide to begin online cannabis sales
in the United States should
federal legalization occur in the United
States; statements regarding the sale of DHC's products on
High Tide's existing U.S. e-commerce platforms and the potential
sale on its Canadian platforms; statements relating to High Tide's
ability to offer DHC subscriptions across it's e-commerce
platforms; and receipt of all requisite regulatory approval,
including from the TSXV. While High Tide considers these
assumptions to be reasonable, based on information currently
available, they may prove to be incorrect. Readers are cautioned
not to place undue reliance on forward-looking statements.
Forward-looking statements also necessarily involve known and
unknown risks, including, without limitation, risks associated with
general economic conditions; adverse industry events; marketing
costs; loss of markets; future legislative and regulatory
developments involving the retail cannabis markets; inability to
access sufficient capital from internal and external sources,
and/or inability to access sufficient capital on favourable terms;
the retail cannabis industries generally; income tax and regulatory
matters; the ability of High Tide to implement its business
strategy; competition; currency and interest rate fluctuations; the
COVID-19 pandemic nationally and globally and the response of
governments to the COVID-19 pandemic in respect of the operation of
retail stores and other risks. Readers are 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. Readers are further cautioned that the
assumptions used in the preparation of such forward-looking
statements (including, but not limited to, the assumption that (i)
High Tide will successfully complete the Transaction (and will
obtain all requisite approvals) on the terms and within the
timelines anticipated by High Tide (ii) High Tide's financial
condition and development plans do not change as a result of
unforeseen events, (iii) there will continue to be a demand, and
market opportunity, for High Tide's product offerings, (iv) current
and future economic conditions will neither affect the business and
operations of High Tide nor High Tide's ability to capitalize on
anticipated business opportunities), although considered reasonable
by management of High Tide at the time of preparation, may prove to
be imprecise and result in actual results differing materially from
those anticipated, and as such, undue reliance should not be placed
on forward-looking statements.
Forward-looking statements, forward-looking financial
information and other metrics presented herein are not intended as
guidance or projections for the periods referenced herein or any
future periods, and in particular, past performance is not an
indicator of future results and the results of High Tide in this
press release may not be indicative of, and are not an estimate,
forecast or projection of High Tide future results. Forward-looking
statements contained in this news release are expressly qualified
by this cautionary statement and reflect our expectations as of the
date hereof, and thus are subject to change thereafter. High Tide
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. Factors that
could cause anticipated opportunities and actual results to differ
materially include, but are not limited to, matters referred to
above and elsewhere in High Tide's public filings and material
change reports, which are and will be available on SEDAR.
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.