Yahoo Finance High Tide to buy Meta Growth, creating Canada’s biggest pot retail chain
Canadian cannabis store chain High Tide (HITI.CN) has announced plans to acquire rival Meta Growth (META.V) in a move to form the country’s largest pot retail chain.
The combined company will have 63 retail locations across Ontario, Alberta, Manitoba and Saskatchewan, Calgary-based High Tide and Toronto-based Meta Growth said in a news release on Friday.
The companies said the combined entity will rank number one in Ontario, based on corporate-owned store count. They plan to expand to 115 locations by the end of 2021, with a focus building stores in Ontario.
Under the terms of the all-stock deal, Meta Growth shareholders will receive 0.824 of a High Tide share for each unit owned, implying a price of $0.13. Following the deal, Meta shareholders will own an estimated 45.6 per cent of the combined company.
"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. Grover and his team will lead the combined company.
The two companies estimate $133 million in annualized sales, and claim to have identified between $8 million and $9 million cost savings. They expect to report positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
The deal takes aim at Fire & Flower (FAF.TO), which had a network of 46 cannabis retail stores in operation as of June 15. Fire & Flower recently unveiled a pilot project to open pot stores next to Circle K locations in Alberta to lure more customers. Circle K’s owner, convenience store giant Alimentation Couche-Tard (ATD-B.TO), owns a 15 per cent stake in Fire & Flower.
More than 1,000 cannabis retail stores have opened across Canada since the legalization of recreational pot in October 2018. On Friday, Statistics Canada reported recreational cannabis sales hit a record $201 million in June, led by strong sales in Ontario.
The slower-than-anticipated pace of store openings in Canada’s most populous province has been a consistent source of frustration for the cannabis industry as it fights to gain share from a persistently strong illegal market.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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