Canadian cannabis chain High Tide Inc. (Nasdaq: HITI) (TSXV: HITI) has finalized an agreement to acquire the Queen of Bud brand, including its intellectual property, for $1 million.
The transaction, set to close in the upcoming weeks, involves $100,000 in cash and the rest in High Tide shares, with the stock price based on a pre-determined formula. The deal is pending approval from the TSX Venture Exchange and other customary closing conditions.
“With well-established brand equity and an extensive customer base across Canada, especially among women, this is an exciting new addition with tremendous future opportunities,” said High Tide founder and CEO Raj Grover.
“This is a strategic investment which will fortify our overall ecosystem, and we expect will deliver meaningful value to shareholders while allowing us to stay nimble and not burden the Company with large capex commitments or overhead. With Ontario, Manitoba and Saskatchewan already allowing white-label brands, and with Alberta and BC considering it, this is a timely move that will allow us to continue expanding our ever-increasing in-house brand portfolio.”
The acquisition adds to High Tide’s growing portfolio and is part of its strategy to boost its market presence, particularly in Canada.
The company currently has 163 stores in five Canadian provinces. Management said that it plans to open at least 96 more stores in Ontario, after the Ontario government moved to allow companies to own up to 150 dispensaries, up from the previous limit of 75.
“Our expectation is to open 20 to 30 stores in calendar 2024 via a combination of organic builds and M&A while remaining free cash flow positive,” Grover told investors in January. “Our market share across the five provinces in which we have a presence was 10% for the quarter. Our long-term goal is to have 15% market in the markets where we operate.”
Under the terms of the deal, Queen of Bud’s founder, Ashley Newman, will assume the role of global brand ambassador for High Tide.
“As one of the first female founders in the Canadian cannabis industry, it’s been an incredible journey building this brand to where it is today,” said Queen of Bud founder and CEO Ashley Newman.
“This is a pivotal moment for the Queen of Bud. Given High Tide’s expertise, extensive store network and capital resources, I feel confident that this arrangement will elevate the brand to even greater heights. Together, Raj and I envision not only elevating cannabis to new heights of sophistication but also expanding our horizons beyond borders into international markets, delving into accessories, candles, fragrances, and beyond. Our heartfelt commitment to customers and passion for excellence fuel this journey, inspiring positive change and innovation in the cannabis world.”
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