High Tide Inc. (CSE:HITI) says it’s planning to buy Meta Growth Corp. (TSXV: META), a deal that would create Canada’s largest cannabis retail chain.
On Friday, Calgary-based High Tide said the combined retail company will have a total of 63 stores across Ontario, Alberta, Manitoba and Saskatchewan.
The companies say they plan to nearly double their store footprint to a combined 115 locations by the end of 2021 with a focus on Ontario, Canada’s largest weed market.
The reported all-stock deal will see Meta Growth shareholders receive 0.824 of a High Tide share for each unit owned, based on the price of $0.13. Once the deal closes, Meta Growth shareholders will own an estimated 45.6 per cent stake in the combined firm.
“The combination with Meta is a watershed moment in High Tide’s evolution as we become Canada’s largest and strongest cannabis retailer,” High Tide CEO Raj Grover said in a statement.
High Tide operates around 30 cannabis stores under its Canna Cabana banner in three Canadian provinces. Photo of Toronto Canna Cabana store in 2019 by Hector Vasquez
According to the press statement, Grover and his team at High Tide will lead the new company going forward.
Read more: Retailer High Tide issues temporary layoffs in Ontario
Both companies expect to reach positive earnings before interest, taxes, depreciation and amortization due to combined efficiencies and cross-selling opportunities.
Annual cost savings of $8–9 million are expected within the first year after the deal is closed and the two companies estimate $133 million in annualized sales.
The new super retailer would rival Fire & Flower (TSX: FAF), the country’s current leader with 46 operational stores. The Edmonton-based firm began a pilot project last month with Circle K by opening two pot shops next to two convenience stores in Alberta. Circle K owner Alimentation Couche-Tard Inc. (TSX: ATD.B) made a $26 million strategic investment and 15 per cent stake in Fire & Flower last year.
With more than 1,000 cannabis stores up and running in Canada, retail sales have been growing steadily. Statistics Canada reported Friday that June sales reached $201 million, up 7.9 per cent from May.
Read more: June Canadian weed retail sales break $200M mark
Top image of Canna Cabana Toronto cannabis store operating last summer by Hector Vasquez
jared@mugglehead.com
@JaredGnam
