Less than two weeks after closing its acquisition of Delta 9 Bio-Tech, Simply Solventless (TSXV: HASH) has entered into another M&A transaction. The latest target is CanadaBis Capital (TSXV: CANB), whom Simply will acquire via an all-stock transaction. CanadaBis currently owns the Stigma Grow, Dab Bods, and High Priestess brands, among others.
The transaction will see Simply Solventless issue 22.5 million shares to acquire CanadaBis, in a transaction that values the company at $16.0 million, or $0.116 per share. The figure represents a 78% premium to CanadaBis’ 30-day volume weighted average price, and a 5.9x multiple on the annualized adjusted EBITDA of the company.
The combination of the two entities is expected to add $35 million in annual revenue and $2.7 million in adjusted EBITDA to Simply’s profile, while enhancing its position within the concentrates and preroll segments. On a proforma basis, annualized revenue is expected to sit at $100 million, while adjusted EBITDA is estimated at $22.1 million, while pushing Simply into the #2 spot for concentrate market share, alongside a #5 position in prerolls and #19 position in vapes within Canada excluding Quebec.
“CanadaBis has achieved positive adjusted EBITDA in thirteen straight quarters and net income profitability in eleven of the past twelve quarters. Despite our profitable operations, it has become clear to our board that industry consolidation and critical mass is required to drive sustainable competitive advantage,” commented CanadaBis CEO Travis McIntyre.
As part of the transaction, McIntyre is expected to take on the role of COO at Simply Solventless, while CanadaBis CFO Shane Chana will join Simply’s board of directors. Simply’s current COO, Murray Brown, will assume the role of Chief Integrations Officer.
In connection with the acquisition, CanadaBis has launched a brokered unsecured convertible debenture financing, aiming to raise gross proceeds of $2.5 million. Debentures, priced at $1,000 per each, contain a conversion price of $0.10 per share. The debentures contain a maturity of 4 years and bear interest at a rate of 11% per annum, payable quarterly.
The transaction remains subject to shareholder approval by CanadaBis shareholders, however 67% of shares have already entered into support agreements for the transaction.
Simply Solventless last traded at $0.61 on the TSX Venture.
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