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Saturday, Dec 4, 2021
Mugglehead Magazine
Cannabis & psychedelics industry news based in Vancouver, B.C.
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Industry update

Fire & Flower to buy legacy-to-legal retailer Friendly Stranger

In a bid to become Canada’s biggest retailer, the Edmonton-based company will acquire the 26-year-old cannabis culture pot shop chain

Fire & Flower to buy long-standing activist retailer Friendly Stranger
Fire & Flower to buy long-standing activist retailer Friendly Stranger

Fire & Flower Holdings Corp. (TSX: FAF) is buying Friendly Stranger, a Toronto retailer rooted in cannabis culture and activism since 1994.

The Edmonton-based company said Monday it will issue over 31.1 million shares to acquire the legacy-turned-legal brand, which would make the proposed deal worth over $24 million based on Fire & Flower’s share price of $0.78 today.

“The acquisition will bring some of Ontario’s longest established Cannabis brands into the Fire & Flower portfolio, transforming us into a multi-banner operator that appeals to a larger cross-section of cannabis customers,” Fire & Flower CEO Trevor Fencott said in statement.

“We are also excited to add Friendly Stranger’s demonstrated expertise in the high-margin accessories business to our team.”

Once the deal closes, Fire & Flower expects to have 66 stores across Canada, including 18 in Ontario and nine additional locations in the queue for licensing.

The move counters High Tide Inc.’s (CSE:HITI) recent endeavour to become the country’s biggest legal weed retailer. In August, the Calgary-based company said it would acquire Meta Growth Corp. (TSXV: META), a deal that would create a combined retail enterprise of 63 stores across four provinces, including Ontario’s rapidly expanding sector.

Read more: High Tide to acquire Meta Growth, creating Canada’s biggest pot retailer

Fire & Flower to buy long-standing activist retailer Friendly Stranger

A Friendly Stranger budtender at flagship Toronto location on Oct. 31, 2020. The retailer began advocating for an end to cannabis prohibition and to make hemp products available to the public almost 25 years before Canada legalized. Press photo

Friendly Stranger is expected to increase the number of stores it owns and operates in Ontario from 11 to 15 by end of 2020. That’s also the latest date Fire & Flower anticipates the deal to close.

The stores operate under Friendly Stranger, Hotbox and Happy Dayz banners and will continue to run with the same brands moving forward, according to Fire & Flower.

Fencott says Friendly Stranger customers will be introduced to his company’s loyalty program Spark Perks, which has a reported 150,000 members across Canada.

Concurrent with the deal, Fire & Flower signed a loan agreement with Friendly Stranger worth up to $2 million to buy certain licensed stores. The loan is secured against Friendly Stranger’s assets and bears an annual interest rate of 1 per cent, which would increase to 13 per cent if the acquisition is terminated.

Fire & Flower stock climbed 7 per cent at press time on the Toronto Stock Exchange.

Top image via Friendly Stranger

 

jared@mugglehead.com

@JaredGnam

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