High Tide Continues Expansion into Global CBD Market With Acquisition of Colorado Based NuLeaf Naturals
High Tide Inc. has announced a definitive agreement to acquire 80% of NuLeaf Naturals for
- Acquisition increases High Tide's U.S. revenue run rate by ~40% to approximately C$70 Million.
- NuLeaf generated US$19.4 Million in revenue and has high margins (71% gross, 25% Adjusted EBITDA).
- Strong e-commerce presence with over 5.1 million site visits, averaging US$120 order value.
- Immediate product synergies expected from the integration of NuLeaf with existing brands FAB CBD and Blessed CBD.
- None.
Transaction Follows Recent Acquisitions of
-
Acquisition boosts High Tide’s current
U.S. revenue run rate by ~40% to approximatelyC .$70 Million
-
Highly accretive transaction for shareholders, as NuLeaf generated revenue of
US and Adjusted EBITDA1 of$19.4 Million US during the 12 months ended$5.26 Million September 30, 2021 , of which direct-to-consumer e-commerce revenue representedUS .$16.3 million
-
NuLeaf has a strong financial profile which generated
71% gross margins and25% Adjusted EBITDA1 margins in 2020.
- NuLeaf continues to drive innovation in the cannabinoid market through their new Multicannabinoid™ oils and softgels. NuLeaf’s Multicannabinoid™ is a comprehensive formula designed to supercharge the endocannabinoid system. This blend contains several key cannabinoids including CBD, CBG, CBN, and CBC in a balanced profile.
- NuLeaf’s cGMP-certified facility enables them to manufacture groundbreaking cannabinoid formulations while exceeding the highest levels of regulatory compliance. High Tide intends to utilize this facility to achieve manufacturing synergies with FAB and Blessed CBD, and to launch Multicannabinoid™ SKUs across those platforms.
-
NuLeaf ranked sixteenth on the prestigious 2020 Inc 5000 list of the fastest growing private companies in
the United States . This marked the second year in a row theDenver -based company appeared in the list's top twenty, showing a remarkable three-year growth of 11,495 percent.2
-
NuLeaf has a strong distribution reach in the natural products channel and recently announced an expansion with Sprouts Farmers Market from 33 retail locations to an additional 235 stores, bringing this to a total of 268 Sprouts stores, in addition to other retail accounts across the
U.S.
Founded in 2014 with its headquarters in
“With this announcement, we have doubled down on our efforts to become a global market leader with respect to hemp-derived CBD production and e-commerce sales. Our strategy is backed by numerous studies which predict that the global CBD market is set to grow exponentially over the coming years, with Fortune Business Insights projecting that it will reach
“We are excited to partner with Raj and the High Tide team to deliver the highest quality cannabinoid products in the world,” said
“This strategic alignment with High Tide will enable us to continue to deliver exceptional value to our customers and retail partners,” said
STRATEGIC HIGHLIGHTS
Accelerates High Tide’s global CBD exposure – While High Tide has been in the CBD sector since launching CBDCity in
High degree of synergies with FAB and Blessed CBD – High Tide intends to pursue a range of synergies between NuLeaf and the FAB and Blessed CBD platforms, including co-packing and shipping products from NuLeaf’s state-of-the-art cGMP-certified facility, bulk purchasing materials collaboratively to save on costs, creating new product lines such as FAB and Blessed CBD Multicannabinoid™ oils and softgels, initiating joint marketing efforts, and combining the e-commerce strengths of all three platforms.
Immediate synergies and cross-selling opportunities – High Tide plans to offer NuLeaf products on its other
Further strengthens High Tide’s position in the e-commerce space – NuLeaf carries multiple product formulations that are exclusive to them. Over
Highly accretive to financial results – Given its large scale and high margin profile, NuLeaf generated gross margins of
Large global potential – Fortune Business Insights recently reported that the global cannabinoid market is projected to grow from just under
TRANSACTION DETAILS
The Transaction, which is an arm's length transaction, is subject to, among other things, receipt of required
In addition to the foregoing, NuLeaf’s owners have agreed to grant High Tide an option to acquire all the remaining interests in NuLeaf not held by High Tide, and become the sole owner of NuLeaf (the “Call Option”), at an enterprise value equal to the trailing twelve months of Adjusted EBITDA1 multiplied by 7.1. The Call Option will be exercisable at any time for a period of three (3) years following the Closing. In addition, High Tide has agreed to grant NuLeaf’s owners an option to put to High Tide the remaining interests in NuLeaf not held by High Tide (the “Put Option”), at the same enterprise value of the Call Option. The Put Option will be exercisable by NuLeaf’s owners for a period of eighteen (18) months following the eighteen (18) month anniversary of the Closing. The consideration under the Call Option or the Put Option, if exercised, will be satisfied in cash.
The High Tide Shares issued pursuant to the Consideration are subject to a statutory hold period of four months and one day.
GRANT OF RESTRICTED SHARE UNITS
Furthermore, High Tide announced that its Board of Directors has approved a grant of 65,472 restricted share units (the (“RSUs”) to certain directors, pursuant to the Company’s restricted share unit plan. Each RSU entitles the holder to acquire one common share of the Company upon vesting.
ABOUT NULEAF NATURALS
NuLeaf Naturals is one of America’s leading cannabinoid companies. Since 2014, NuLeaf has been committed to creating the world’s highest quality cannabinoid products in their most pure and potent form. NuLeaf’s products are produced at a cGMP-certified facility enabling them to manufacture groundbreaking cannabinoid formulations while exceeding the highest levels of regulatory requirement. The company is committed to creating safe, consistent, and effective products and has proudly received over 25,000 verified 5-star customer reviews through their e-commerce platform. NuLeaf also ranked sixteenth on the prestigious 2020 Inc 5000 list of the fastest-growing private companies in
ABOUT
High Tide is a leading retail-focused cannabis company with bricks-and-mortar as well as global e-commerce assets. The Company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 104 current locations spanning
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend” or the negative of these terms and similar expressions. Forward-looking statements in this news release include statements relating to: the ability of High Tide to complete the Transaction; High Tide’s ability to become a global leader in the e-commerce marketplace for hemp-derived CBD products; the ability of NuLeaf to produce 60,000 plant-based softgels per hour; the growth in interest in health focused and sustainable products; the ability of NuLeaf to complete the expansion into Sprouts Farmers Market from 33 retail locations to an additional 235 stores; the growth of the global CBD market; the potential for new markets to open up; the ability of the Company to integrate NuLeaf with its other CBD brands; the ability of High Tide to offer NuLeaf products across its other
Forward-looking information in this news release are based on certain assumptions and expected future events, namely: that High Tide will successfully complete the Transaction (and will obtain all requisite approvals) on the terms and within the timelines anticipated by High Tide; High Tide’s financial condition and development plans do not change as a result of unforeseen events; there will continue to be a demand, and market opportunity, for High Tide’s product offerings; current and future economic conditions will neither affect the business and operations of High Tide nor High Tide’s ability to capitalize on anticipated business opportunities), although considered reasonable by management of High Tide at the time of preparation, may prove to be imprecise and result in actual results differing materially from those anticipated, and as such, undue reliance should not be placed on forward-looking statements.
These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements, including but not limited to: the risks associated with the cannabis and CBD industries in general; High Tide’s inability to become a global leader in the e-commerce marketplace for hemp-derived CBD products; the inability of High Tide to close the Transaction; CBD business globally; the inability of NuLeaf to produce 60,000 plant-based softgels per hour; risks with respect to the growth in interest in health focused and sustainable products; the inability of NuLeaf to complete the expansion into Sprouts Farmers Market from 33 retail locations to an additional 235 stores; lack of growth in the global CBD market; the inability of new markets to open up; the inability of the Company to integrate NuLeaf with its other CBD brands; the inability of the Company to offer NuLeaf products across its other
Forward-looking statements, forward-looking financial information and other metrics presented herein are not intended as guidance or projections for the periods referenced herein or any future periods, and in particular, past performance is not an indicator of future results and the results of High Tide in this press release may not be indicative of, and are not an estimate, forecast or projection of High Tide future results. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. High Tide disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Factors that could cause anticipated opportunities and actual results to differ materially include, but are not limited to, matters referred to above and elsewhere in High Tide's public filings and material change reports, which are and will be available on SEDAR.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in
1 Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) does not have a standardized meaning prescribed by IFRS.
2 Source: https://www.inc.com/inc5000/2020.
3 Data from
4 Source: https://www.fortunebusinessinsights.com/cannabidiol-cbd-market-103215
View source version on businesswire.com: https://www.businesswire.com/news/home/20211122005336/en/
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omar@hightideinc.com
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vahan@hightideinc.com
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