- 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, August 12, 2021 /CNW/ − High Tide Inc. (“High Tide” or the “Company”) (TSXV: HITI) (Nasdaq: HITI) (FSE: 2LYA), a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, is pleased to announce that further to its press release dated July 20, 2021, the Company has completed the acquisition (the “Acquisition”) of DS Distribution Inc., operating as DankStop.com (“DankStop”).
The acquisition is just one of a series of recent steps the Company has taken to expand its footprint in the United States market and dominate the e-commerce marketplace for consumption accessories.
The acquisition was completed pursuant to the terms of the definitive agreement dated July 20, 2021 (the “Acquisition Agreement”), pursuant to which High Tide USA Inc., a wholly-owned U.S. subsidiary of High Tide, purchased 100% of the issued and outstanding shares of DankStop from its shareholders for US$3,850,000, comprised of 612,087 common shares of High Tide (“High Tide Shares”) on the basis of a deemed price per High Tide Share of $7.88, being equal to the volume weighted average price per High Tide Share on the TSX Venture Exchange (the “TSXV”) for the ten consecutive trading days preceding the closing of the acquisition (“Closing”).
Pursuant to the terms of the acquisition agreement, 153,021 High Tide Shares, which represent 25% of the High Tide Shares issued to the DankStop shareholders, has been placed in escrow for a period of up to 12 months from closing.
The company is pleased to announce that DankStop co-founder Feliks Khaykin has joined the High Tide team, as Director of U.S. Operations.
Upon closing, DankStop has approximately US$100,000 of cash and non-cash working capital and inventory of approximately US$220,000. DankStop will continue its corporate existence under the state of Delaware as a 100% owned subsidiary of High Tide USA Inc.
Strategic Highlights
With over ten 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 acquisition is immediately revenue-accretive and DankStop’s 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 result in enhanced efficiencies and vertical integration as DankStop is already a supplier for High Tide’s drop-shipping 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.
[1] As of June 21st, 2021, based on analytics data provided by Alexa Internet, Inc. related to Grasscity, SmokeCartel and Daily High Club. Traffic data provided by Google Analytics.
