Canadian cannabis retailer High Tide Inc. (TSXV:HITI) (NASDAQ:HITI) (FSE: 2LYA) announcedit has completed the acquisition of Bud Room Inc., as well as assignments of the vendors' shareholder loans.
The Calgary-based company also acquired all rights to the customized Fastendr retail kiosk and smart locker technology and Bud Room's retail cannabis store located at 1910 St. Laurent Blvd in Ottawa, Ontario.
What Happened?
The acquisition was completed pursuant to the terms of a share purchase agreement.
High Tide acquired 100% of Bud Room as well as assignments of the vendors' shareholder loans for 674,650 common shares of High Tide valued at CA$3.6 million ($2.84 million), on the basis of a deemed price of CA$5.3361 per High Tide share.
Pursuant to the deal, the purchase price is subject to a post-closing working capital adjustment provision. Under this provision, the parties will adjust the purchase price to offset any increase or decrease of the net working capital as of the closing date.
From the share consideration, an amount equal to $300,000 will be held in escrow for a period of twelve months by High Tide's lawyers to satisfy Bud Room's indemnity with respect to possible claims based on breaches of representation and warranties.
In connection with the closing of the transaction, Bud Room's founder and CEO, Michael DiDuca, will remain engaged with the High Tide team assisting in launching Fastendr. High Tide granted 13,538 stock options to DiDuca exercisable at CA$6.25 per High Tide share for a period of 3 years.
Why It Matters?
High Tide through this acquisition gains ownership of the Fastendr technology which will improve the company's competitive advantage in bricks-and mortar cannabis retail.
Fastendr is a unique and fully automated technology that integrates retail kiosks and smart lockers to facilitate a better buying experience through browsing, ordering and pickup.
It offers faster transaction times, increased average basket size, lower overhead and labor costs, and provides a seamless end to end customer experience.
It also provides High Tide with potential new revenue generation, data collection and monetization opportunities from third party retail locations, and will further enhance the value of its Cabannalytics data insights offering.
In addition, the Bud Room retail location is currently generating annual run rates in excess of $2.4 million in revenue and $500,000 in Adjusted EBITDA.
What’s Next?
The closing of the transaction remains subject to final approval from the TSXV.
All existing and future Canna Cabana locations will be equipped with Fastendr, a customized and innovative kiosk and smart locker technology, as it delivers a faster customer experience in busier retail locations while also enabling the efficient operation of smaller footprint stores.
High Tide intends to license this technology to third party retailers starting with the cannabis industry, and expanding to other retail sectors across North America and beyond.
Photo: Courtesy of High Tide Inc.
