- With almost 5 million site visits in 2020, Blessed CBD is
one of the most popular direct-to-consumer CBD brands in the
U.K.1
- Blessed has been featured as the best U.K. CBD Oil in
several publications including The Mirror, Reader’s Digest, and
Maxim Magazine.2
- Blessed has a strong financial profile which generated 81%
gross margins and 54% EBITDA margins for the 12 months ended August
2021.3
- Highly accretive transaction for shareholders, as Blessed
generated revenue of £5.1 Million and £2.8 Million in EBITDA for
the 12 months ended August 2021.4
- Complementary acquisition adding a fully direct-to-consumer
e-commerce platform, which is in line with High Tide's retail
strengths.
- The acquisition creates meaningful synergies and
cross-selling opportunities across all of High Tide’s e-commerce
platforms.
High Tide Inc. (“High Tide” or the “Company”)
(TSXV: HITI) (Nasdaq: HITI) (FSE: 2LYA), a retail-focused cannabis
company enhanced by the manufacturing of proprietary and licensed
consumption accessories, is pleased to announce that it is taking
another step towards solidifying itself as a major player within
the global e-commerce marketplace for hemp-derived CBD products, by
entering into a definitive agreement (the “Acquisition
Agreement”), pursuant to which High Tide will acquire 80% of
Enigmaa Ltd., operating as Blessed CBD, (“Blessed”) for
£9.06 Million (the “Transaction”), and will have a
three-year option to acquire the remaining 20% of Blessed at any
time.
Founded in 2019 with its headquarters in Scotland, Blessed has
quickly grown to become one of the most popular brands for
hemp-derived CBD products across the U.K., including CBD oils,
creams, gummies, and capsules. In 2020 Blessed had almost 5 million
site visits and an average order value of approximately £75.
Blessed’s founder and Chief Executive Officer, Vithurs Thiru (known
more commonly as “V”), will join the High Tide team as
Senior Manager of Search (SEO) of the Company, and will help grow
High Tide’s CBD business globally.
“I’m very pleased to announce the addition of Blessed CBD, the
U.K.’s top CBD brand as designated by several prominent
publications, into the High Tide family. We continue to increase
our online prowess by adding asset-light businesses to our growing
global e-commerce portfolio. Blessed is a fully direct-to-consumer
platform that generates industry-leading gross margins as well as
EBITDA margins that will continue to add to our consolidated margin
profile,” said Raj Grover, President and Chief Executive Officer of
High Tide. “This acquisition marks our entry into the highly
lucrative and rapidly-growing U.K. CBD space which we expect to
serve as a launching pad for High Tide to further penetrate the
E.U. market for hemp-derived CBD products, while also taking
advantage of cross-selling opportunities related to our in-house
product lines. I have been very impressed with the amazing business
that V has been able to build within just two years, and look
forward to welcoming him and the rest of the Blessed team into our
company,” added Mr. Grover.
“Blessed CBD has experienced rapid growth and success from
inception, and our goal is to become the most sought-after CBD
brand globally. Our team is super excited to be joining hands with
Raj, and by leveraging High Tide's existing resources and reach, I
couldn't be more excited about the future,” said Vithurs Thiru, CEO
of Blessed. “I look forward to working with Raj and his team to
accelerate the digital presence of High Tide's brands, and to
position High Tide as one of the leading vertically-integrated
cannabis companies in the industry. This acquisition provides
unparalleled opportunities for growth to serve our current and
future customers, expand into emerging new markets, and introduce
new products unmatched in quality,” added Mr. Thiru.
Strategic Highlights
Accelerates High Tide’s U.K. Exposure – The addition of Blessed
will turn High Tide into a major player in the U.K. CBD market.
Direct to Consumer Platform Compliments High Tide’s Existing
E-Commerce Portfolio – Blessed carries multiple product
formulations that are exclusive to Blessed and are manufactured by
reputable contract manufacturers. 100% of sales are
direct-to-consumer online from the Blessed.co.uk website. Since its
founding two years ago Blessed has fulfilled over 120,000 orders to
approximately 87 thousand customers.
Novel Foods Authorization - Blessed has submitted their novel
food applications to the U.K. government's Food Standards Agency.
This is a key step in ensuring continued compliance for their
products in the U.K. and other markets.
Large Global Potential – A recent report from Global Market
Insights found that the international CBD Market size surpassed USD
$7.1 billion in 2020 and is estimated to grow at a compound annual
growth rate (CAGR) of over 35% between 2021 and 2027.5 The European
Business review recently cited a study by Grandview Research which
predicts that, “over the next five years, the global CBD industry
is projected to accelerate to $23.6 billion.”6
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 during October 2021, implies an
enterprise valuation of £11.3 Million, representing 4.0x EBITDA
generated during the 12 months ended August 2021. The consideration
for the 80% acquired will be comprised of: (i) £4.9 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 the TSXV for the ten (10) consecutive trading days
preceding closing of the Transaction (“Closing”); and (ii)
£4.2 Million in cash (collectively with the Share Consideration,
the “Consideration”). The cash portion of the transaction
will be funded entirely with cash on hand.
In addition to the foregoing, Blessed’s founder has agreed to
grant High Tide an option to acquire all the remaining shares in
Blessed not held by High Tide, and become the sole shareholder of
Blessed (the “Call Option”), at an enterprise value equal to
the trailing twelve (12) months of revenue at that time multiplied
by 2.2. The Call Option will be exercisable at any time for a
period of three (3) years following the Closing. In addition, High
Tide has agreed to grant Blessed’s founder an option to put to High
Tide the remaining shares in Blessed not held by High Tide (the
“Put Option”), at the same enterprise value of the Call
Option. The Put Option will be exercisable by Blessed’s founder for
a period of two (2) years following the first anniversary of the
Closing. The consideration under the Call Option or the Put Option,
if exercised, will be satisfied in 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 ten (10)
consecutive trading days preceding closing of the Call Option or
Put Option, as the case may be.
The High Tide Shares issued pursuant to the Share Consideration
are subject to a statutory hold period of four (4) months and one
(1) day.
KPMG LLP conducted financial due diligence on behalf of High
Tide for the Transaction. Garfinkle Biderman LLP and Ince Gordon
Dadds LLP are acting as legal advisors for High Tide in connection
with the Transaction and Carlsquare and Addleshaw Goddard LLP acted
for Blessed in connection with the Transaction.
ABOUT BLESSED CBD
Enigmaa Ltd., operating as Blessed CBD is one of the leading
online retailers of hemp-derived CBD products in the U.K. The
company provides a marketplace with a wide variety of high-quality
products and formulas, affordable pricing, rapid dependable
shipping, and surprisingly personable customer service. Blessed CBD
has been featured as the best UK CBD Oil in several publications
including The Mirror, Reader’s Digest, and Maxim Magazine.
ABOUT HIGH TIDE
High Tide is a retail-focused cannabis company enhanced by the
manufacturing of proprietary and licensed consumption accessories.
The Company is the largest Canadian retailer of recreational
cannabis as measured by revenue, with 101 current locations
spanning Ontario, Alberta, Manitoba and Saskatchewan, and was
featured in the third annual Report on Business Magazine's ranking
of Canada's Top Growing Companies in 2021. 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 established ecommerce
platforms including Grasscity.com, Smokecartel.com,
Dailyhighclub.com, and Dankstop.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.
CAUTIONARY NOTE REGARDING 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 creation of synergies and cross-selling
across High-Tide’s e-commerce platforms; High Tide’s ability to
become a global leader in the e-commerce marketplace for
hemp-derived CBD products; the ability of High Tide to complete the
Transaction; the ability of V to grow High Tide’s CBD business
globally; the ability of the Transaction to serve as an entry point
into the EU marketplace for the Company; V joining the Company as
General Manager of Digital Marketing and SEO; Blessed’s working
capital upon closing of the Transaction; and the ability of Blessed
to obtain authorization from the Food Standards Agency; and the
growth-rate of the global CBD market.
Forward-looking information in this news release are based on
certain assumptions and expected future events, namely: that High
Tide will successfully complete the Transaction (and will obtain
all requisite approvals) on the terms and within the timelines
anticipated by High Tide; High Tide’s financial condition and
development plans do not change as a result of unforeseen events;
there will continue to be a demand, and market opportunity, for
High Tide’s product offerings; V will join the Company as General
Manager of Digital Marketing and SEO; Blessed will have the stated
working capital upon closing of the Transaction; and 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, these
assumptions 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.
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 CBD industries in general; the
inability of High Tide to create synergies across it’s e-commerce
platforms; High Tide’s inability to become a global leader in the
e-commerce marketplace for hemp-derived CBD products; the inability
of High Tide to close the Transaction and/or receive all necessary
approvals; the inability of V to grow High Tide’s CBD business
globally; the inability of the Transaction to serve as an entry
point into the EU marketplace; the inability of Blessed to obtain
authorization from the Food Standards Agency; risks that the global
CBD market will not grow at the anticipated growth-rate; risks
associated with potential legislative and/or regulatory changes by
the relevant governmental and/or regulatory bodies; risk that V
will not join the Company as General Manager of Digital Marketing
and SEO; risk that Blessed will not have the requisite working
capital upon closing of the Transaction; and risks associated with
High Tide’s and/or Blessed’s inability to obtain board of director
and/or shareholder approval of the Transaction.
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.
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 Data as per Google Analytics 2 Sources: The Mirror:
https://www.mirror.co.uk/lifestyle/health/best-cbd-oil-uk-2021-23153703
Reader's Digest:
https://www.readersdigest.co.uk/health/wellbeing/cbd-oil-uk-the-8-best-cbd-oils-in-the-uk-reviewed
Maxim Magazine: https://www.maxim.com/news/cbd-oil-uk/ 3 Unaudited.
4 Unaudited. 5 Source:
https://www.gminsights.com/industry-analysis/cannabidiol-cbd-market
6 Source:
https://www.prnewswire.com/news-releases/global-cbd-industry-projected-to-accelerate-to-23-6-billion-over-the-next-five-years-301179412.html
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211007005388/en/
Media Inquiries Omar Khan Senior Vice President - Corporate and
Public Affairs High Tide Inc. omar@hightideinc.com
Investor Inquiries Vahan Ajamian Capital Markets Advisor High
Tide Inc. vahan@hightideinc.com
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