High Tide Announces Strategic Acquisition of ‘Highly Accretive’ Cannabis Store for $438K
High Tide Inc. (NASDAQ:HITI), a key player in the Canadian cannabis retail sector, has recently declared its upcoming acquisition of a retail cannabis store situated in Mississauga, Ontario. The store, currently operating under the name Cantopia, will be acquired by High Tide for a total of CA$600,000 ($438,417).
Located in a bustling retail plaza in Mississauga, Cantopia is well-positioned among several small businesses, adjacent to an internationally known quick-serve restaurant. This proximity to both a national discount retailer and a Canadian discount grocery chain underscores the strategic location of the acquisition.
Raj Grover, the founder and chief executive officer of High Tide, shared insights on the company’s approach to mergers and acquisitions (M&A). “High Tide has always prioritized quality over quantity in our M&A endeavors, and the acquisition of Cantopia aligns perfectly with our selective strategy,” Grover remarked. He emphasized that the company has concentrated on organic growth since the end of 2022, adding 24 locations without significant M&A activities due to a buyer’s market environment. Grover highlighted the company’s strategy of waiting for the right opportunities without succumbing to unrealistic expectations.
For the quarter ending May 31, 2024, Cantopia reported impressive financial figures, with annualized revenue reaching CA$2.3 million and an annualized Adjusted EBITDA of $400,000. The acquisition’s price reflects 1.5 times the annualized adjusted EBITDA for this period, showcasing the financial prudence behind the transaction.
“As the Canadian retail cannabis market experiences increased consolidation, many operators are evaluating their current positions and the limited options ahead,” Grover explained. He noted that joining forces with High Tide presents an advantageous situation for these retailers, enabling them to navigate challenging market conditions while adding valuable, operational sites to High Tide’s portfolio. Grover expressed enthusiasm for incorporating another highly accretive store into their retail network and remains open to further strategic M&A opportunities.
In terms of High Tide’s financial movements, shares held steady at $2.2 per share during the pre-market session on Wednesday. This acquisition not only highlights High Tide’s strategic growth objectives but also emphasizes the company’s position as a leading entity in the rapidly evolving Canadian cannabis industry.
This significant development comes on the heels of High Tide’s recent financial disclosures, which reported a robust $34.5 million cash position. Furthermore, the company has been aggressively expanding its cannabis retail footprint, underlining its commitment to achieving a dominant market position.
This acquisition marks a pivotal step for High Tide as it continues to navigate the dynamic cannabis landscape in Canada, aiming for sustainable growth and increased market share through strategic acquisitions and organic expansion.
