- High Tide acquires another top e-commerce platform for its portfolio which already includes 3 out of the top 5 most popular e-commerce platforms for consumption accessories and totaled almost 100 million site visits across all platforms in 2020, including 2.5 million associated with DankStop.1
- High Tide gains access to DankStop’s more than 200,000 email subscribers and further bolsters its online presence by gaining access to DankStop’s almost 335,000 Instagram followers.
- Transaction is immediately accretive as DankStop generated revenue over US$3 million during the 12 months ended April 30 2021, with an EBITDA margin in the low double digits.
- Pro forma for the acquisition, High Tide’s revenue run rate in the U.S. is approximately CAD$55 million.
- High Tide adds an asset light business that is already a supplier for its dropshipping catalogue, resulting in enhanced efficiencies and vertical integration.
CALGARY, AB, July 20, 2021 /CNW/ – High Tide Inc. (“High Tide” or the “Company“) (TSXV: HITI) (Nasdaq: HITI) (FRA: 2LYA), a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, is pleased to announce that its pursuit to dominate the e-commerce marketplace for consumption accessories and merchandise, especially targeting the United States, has attracted another leading retailer to join the High Tide family. High Tide has entered into a definitive agreement (the “Acquisition Agreement“) pursuant to which High Tide USA Inc., a wholly-owned U.S. subsidiary of the Company will acquire 100% of the issued and outstanding shares of DS Distribution Inc. (“DankStop“), operating as DankStop.com for US$3.85 Million (the “Transaction“).
“This acquisition is yet another example of how High Tide’s U.S. e-commerce infrastructure and network keep getting stronger. Rolling multiple established e-commerce platforms into our network is positioning us nicely to create numerous synergies and efficiencies across our ecosystem. Along with this transaction, our last two acquisitions have increased High Tide’s social media reach by leaps and bounds, giving us access to an invaluable potential customer base,” said Raj Grover, President and Chief Executive Officer of High Tide. “Being vertically integrated in the consumption accessories space and having access to the end consumer will continue to result in our ability to make meaningful high margin sales across all of our channels. Having already commenced online cannabis sales in three Canadian provinces, and already possessing an established customer network in place in the U.S. positions us well to commence online cannabis sales and cannabis subscription boxes in the United States if and when federally permissible. It is for these and many other reasons that I am delighted to welcome the DankStop team to the High Tide family of companies,” added Mr. Grover.
With over 10 years of experience in the consumption accessories sector, including through its subsidiaries Grasscity, Smoke Cartel and Daily High Club, High Tide is constantly exploring opportunities to further increase its share in the growing consumption accessories market. The DankStop acquisition will be immediately accretive and its growing base of over 200,000 email subscribers provides High Tide with another sales channel on which to sell its products, thus leveraging retail margins on its own brands. The acquisition will also result in enhanced efficiencies and vertical integration as DankStop is already a supplier for High Tide’s dropshipping catalogue. Although currently operating in the hemp-derived CBD and consumption accessories space, High Tide intends to expand its cannabis retail network into the United States in the event of federal legalization, through cannabis subscription boxes, mature e-commerce sites and bricks and mortar locations. The work of launching consumption accessories and hemp-derived cbd subscription boxes across all platforms has begun and High Tide will continue to optimize and integrate these platforms throughout the year. Upon closing of the transaction DankStop co-founder Feliks Khaykin and director Gabe Aronovich will be joining the High Tide team with Feliks taking on the role of Director of U.S. Operations and Gabe coming on as Director of U.S. Business Development.
The Transaction, which is an arm’s length transaction, is subject to, among other things, receipt of required TSX Venture Exchange (“TSXV“) approval, and other customary conditions of closing, is expected to close in the coming weeks. Pursuant to the terms of the Transaction, High Tide USA Inc., a Nevada corporation and a wholly-owned subsidiary of High Tide, will purchase 100% of the issued and outstanding shares of DankStop. The consideration for the 100% of DankStop acquired will be US$3.85 Million (the “Consideration“) in common shares of High Tide (“High Tide Shares“) on the basis of a deemed price per High Tide Share equal to the volume weighted average price per High Tide Share on the TSXV for the 10 consecutive trading days preceding closing of the Transaction (“Closing“). Upon closing, DankStop will have approximately US$100,000 of cash and non-cash working capital and inventory of approximately US$220,000. Following the completion of the Transaction, DankStop will continue its corporate existence under the state of Delaware as a 100% owned subsidiary of High Tide USA Inc.
“I’m truly excited to be joining the High Tide team and to begin overseeing High Tide’s U.S. business development initiatives,” said Gabe Aronovich. “The synthesis of High Tide’s expansive e-commerce and manufacturing capabilities with DankStop’s vast subscriber base and social media presence will solidify High Tide’s position as the global leader in the online consumption accessory market, and I could not be more delighted to be part of the High Tide family,” added Mr. Aronovich.
The Transaction has been unanimously approved by the board of directors of High Tide and DankStop. The High Tide Shares issued pursuant to the Consideration are subject to a statutory hold period of four months and one day.
DankStop is a leading online consumption accessories retailer. With an industry leading and innovative website, and dedicated support team, DankStop has raised the bar for the online consumption supply industry since 2014. Leveraging its in-house technology, DankStop now offers a variety of B2B services for the Cannabis industry in addition to its retail websites ranging from drop shipping to third party logistics. Information on the Company and its many products can be accessed through: www.DankStop.com.
ABOUT HIGH TIDE
High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The Company is the most profitable Canadian retailer of recreational cannabis as measured by Adjusted EBITDA,2 with 87 current locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide’s retail segment features the Canna Cabana, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous consumption accessory businesses including e-commerce platforms Grasscity.com, Smoke Cartel and CBDcity.com, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide’s strategy as a parent company is to extend and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Tilray Inc. (TSX:TLRY) (Nasdaq:TLRY) and Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB).
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.