Harborside Inc (CSE: HBOR) now has further brands under its banner. The company this morning announced the closing of the acquisition of Sublimation Inc, whom is more commonly known as Sublime.
Originally founded in 2016, Sublime is known for its line of Fuzzies branded pre-rolls, which is a leading brand within California. The company also offers vapes and flower kits, with the company currently boasting a compound annual growth rate of 70%. The company currently holds 7.9% of the pre-roll market in California.
With the acquisition now closed, the company expects to “realize significant synergies,” with Sublime’s brands, production abilities, and distribution system to be combined with the firms Salinas cultivation facility. The combination is expected to result in improved gross profit and EBITDA. The company is also exploring the option of licensing the Fuzzies California brand in other jurisdictions.
“With a strong balance sheet and deep cultivation and brand building expertise, our unified company is well-positioned to support the continued growth of the Sublime brands while expanding the reach of Harborside’s existing branded product portfolio in both the retail and wholesale markets.”
Peter Bilodeau, Interim CEO
Under the terms of the acquisition, a total figure of US$43.8 million was paid for the company, which equates to roughly 1.78x Sublime’s 2020 sales of $24.6 million. Consideration consisted of $5.4 million in cash, as well as US$38.4 million in the form of multiple voting shares of the company. Shares issued are subject to a lock-up arrangement, with the first to be unlocked on the twelve month anniversary of the transaction.
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Harborside last traded at $1.78 on the CSE.
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