High Tide Inc. (TSXV: HITI), is expanding its presence in the US market. The company this morning announced that it will be acquiring Daily High Club, an e-commerce platform focused on consumption accessories.
The acquisition comes as High Tide works to bolster its presence in the US, where it plans on expanding its cannabis retail network in the event of federal legalization. Although operating in the hemp-derived CBD and consumption accessory space at present, DHC marks a strategic purchase for High Tide, with the company currently having over 15,000 subscription box members. The firm expects to be able to transition a sizable portion of these subscribers to a potential cannabis subscription box upon legalization.
The transaction is said to be at arms length and immediately accretive, as DHC generated US$9.4 million in net revenue, and US$1.2 million in EBITDA during the 12 months period ended April 2021. On a pro-forma basis, the company as a result has stated that its revenue run rate in the United States is now over CAD$50 million.
Consideration for Daily High Club is said to amount to US$10 million in aggregate. This figure is set to consist of both cash and shares, with a total of US$6.75 million to be paid in the form of common shares and $3.25 million to be paid in cash.
The transaction is slated to close by the end of June.
High Tide Inc. last traded on the TSX Venture at $9.92.
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