High Tide to acquire 51% of Purecan for EUR 4.8M, enters German market

High Tide (HITI) announced that it is entering the German medical cannabis market by signing a definitive agreement pursuant to which the company will acquire 51% of Purecan, for approximately EUR 4.8M, and will have a future option to acquire the remaining interest in Purecan. The transaction, which is an arm’s length transaction, is subject to, among other things, receipt of required TSX Venture Exchange approval, and other customary conditions of closing and is expected to close in the coming weeks. It implies an enterprise valuation of EUR 9.5M, representing three times annualized adjusted EBITDA generated during the six months ended December 31, 2024. The purchase price for the 51% acquired will be EUR 4.8M broken out as follows: EUR 2.4M in common shares of High Tide priced at the volume weighted average price per High Tide Share on TSXV for 10 trading days ending January 7 of C$4.53 multiplied by the Bank of Canada’s C$ to EUR rate as at January 7, of 1.4871, for a total of 792,126 shares; EUR 1.2M in cash; EUR 1.2M in a promissory note. The note will mature two years after the closing date, bear 7% annual interest, and be prepayable at any time by the company with no penalty. In addition to the foregoing, Purecan’s owners have agreed to grant High Tide an option to acquire the remaining interests in Purecan not held by High Tide, at an enterprise value equal to the trailing twelve months of adjusted EBITDA multiplied by three. The call option will be exercisable at any time for a period of five years, following the 18 month anniversary of the closing. In addition, High Tide has agreed to grant Purecan’s owners an option to put to High Tide the remaining interests in Purecan not held by High Tide, at the same enterprise value as the call option during the same time period. The consideration under the call option or the put option, if exercised, will be satisfied in a combination of cash and High Tide shares, at High Tide’s discretion. Any High Tide shares issued in connection with the transaction are subject to a statutory hold period of four months and one day.