WINNIPEG, Manitoba, Aug. 15, 2022 (GLOBE NEWSWIRE) — PRESS RELEASE — Delta 9 Cannabis Inc. has announced that today it has entered into an asset purchase agreement with 10552763 Canada Corp. to acquire all or substantially all of the vendor’s assets relating to the operation of three Garden Variety branded retail cannabis stores located in Manitoba, two in Winnipeg and one in Brandon.
“We are pleased to announce another strategic retail acquisition to grow our market share across the Canadian prairies,” said John Arbuthnot, CEO of Delta 9. “On closing of this transaction Delta 9 will operate 38 stores, positioning us as one of Canada’s largest vertically integrated cannabis retailers.”
The purchase price to be paid by the company relating to the transaction will be $3,250,000, subject to customary adjustments. $2,925,000 of the purchase price will be satisfied through the issuance of such number of common shares in the capital stock of the company (each a common share) equal to the deemed price of the 10 day volume weighted average price of the common shares on the Toronto Stock Exchange (the TSX) on the date immediately preceding the closing date of the transaction (the common share price). $325,000 of the purchase price will be satisfied through the issuance of such number of common shares equal to the common share price, which will remain held in escrow for a period of approximately six months.
The Garden Variety retail cannabis stores have demonstrated significant revenue, EBITDA, and earnings growth over 2020 and 2021. The company expects the transaction to be accretive in 2022 and 2023 before synergies. The acquisition represents an attractive revenue multiple of approximately 0.41x annualized revenue. The combination of the Garden Variety cannabis stores and Delta 9’s existing store network will make Delta 9 a leading retailer of cannabis products in Manitoba.
The purchase agreement includes several customary conditions in favour of the company, including due diligence and the approval of the TSX. The closing of the transaction remains subject to the approval of the TSX.
The transaction is expected to close on or around Aug. 29, 2022.