High Tide Inc. (TSXV: HITI) announced this morning that its plans to add a retail-focused cannabinoid company to its portfolio. The company has signed a definitive agreement to acquire 80% of Colorado-based operator NuLeaf Naturals.
The acquisition is reportedly priced at US$31.24 million. This implies an enterprise value of US$39.05 for the Colorado firm, which is 7.1 times its projected annual 2021 adjusted EBITDA. The firm also generated US$19.4 million in revenue for the 12 months ended September 30, 2021, with e-commerce revenue contributing US$16.3 million to the topline figure.
“With the purchase of NuLeaf, we are now further vertically integrated in our CBD business, just like we have been with regard to consumption accessories,” said High Tide CEO Raj Grover. “As international markets open up and as export regulations evolve, NuLeaf’s cGMP-certified facility positions us to take advantage of the global CBD business opportunity.”
High Tide has the option to acquire the remaining 20% equity within three years from the closing of the transaction. The price consideration will also be 7.1 times the firm’s total adjusted EBITDA for the trailing 12 months.
The cannabis company further highlighted that the acquisition can boost its US revenue run rate to approximately $70.0 million.
No specific schedule has been disclosed regarding the closing of the transaction but the company relayed that it is expected in “the coming weeks”, subject to regulatory approvals and customary closing conditions.
High Tide last traded at $7.76 on the TSX Venture.
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