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The strategic acquisition of Canndara will more than double Westleaf's premium portfolio of retail locations across Canada, all under the banner "Prairie Records"
CALGARY, Jan. 24, 2019 /CNW/ - Westleaf Inc. (TSX-V: WL) ("Westleaf"), is pleased to announce that it has exercised its option to acquire 100% of Canndara Canada Inc. ("Canndara"), a cannabis retail company with over fifty (50) prospective premium retail locations across Canada. On Dec. 20, 2018, Westleaf purchased 21.4% of the Class "A" common voting shares of Canndara ("Canndara Shares") and secured an option (the "Option") to acquire the remaining 78.6% of the Canndara Shares for an aggregate purchase price of $48.4 million (the "Purchase Price"). The Purchase Price is payable in common shares in the capital of Westleaf ("Common Shares") at a deemed value of $2.24 per Common Share. Closing is expected to occur on or about January 31, 2019 ("Closing").
Canndara's locations are at varying stages of development with seventeen (17) development permits already awarded in Western Canada. As a result of the transaction, Westleaf has increased its guidance from 20 to 30 cannabis retail locations to approximately 50 locations, that are expected to be operating by the end of 2020, subject to provincial and municipal licensing and regulations.
"Since the announcement of our original investment we continue to be impressed with the progress of the development of the Canndara retail portfolio and how well it complements the Westleaf Prairie Records retail locations. This acquisition will position Westleaf to become one of the largest premium cannabis retailers in Western Canada." said Scott Hurd, President and CEO of Westleaf. "Cannabis retail is the cornerstone of our vertically integrated strategy as the unique Prairie Records concept enables Westleaf to engage with consumers and build brand equity and loyalty for its stores and produced product brands."
- Increased Retail Footprint and Accelerated Development – Following Closing, Westleaf will have one of the largest cannabis retail footprints under development in Western Canada and will target opening approximately 50 cannabis retail stores in Canada through 2020.
- Premium Cannabis Retail Portfolio – The Canndara portfolio of cannabis retail real estate locations is highly complementary to the existing Westleaf portfolio and reinforces Westleaf's strategy of focusing only on tier-1 locations. Examples of prime locations in the portfolio will include, following Closing, the only approved development permits adjacent to the University of Alberta complemented by Westleaf's premium locations under development in Calgary and Banff, including a flagship Prairie Records store in the iconic Palace Theatre in Calgary.
- Differentiated Cannabis Retail Experience – The Westleaf retail concept "Prairie Records" is the most unique cannabis retail experience in Canada and offers a musically inspired shopping journey, using "records" as a tactile medium for consumers to browse and educate themselves on cannabis products for sale in store.
- Unique Branding Opportunity – Prairie Records offers an unparalleled in-store branding opportunity that provides dimension and visibility to product brands for consumers that is difficult to achieve due to the highly regulated packaging and advertising restrictions.
- Demonstrated Focus on Accretive Consolidation – The exercise of the Option reinforces Westleaf's focus on consolidation in the various verticals of the cannabis industry. The cannabis market is highly fragmented and Westleaf continues to actively evaluate additional accretive merger and acquisition opportunities.
- Truly Vertically Integrated Company – Westleaf is one of the few truly vertically integrated companies in the Canadian cannabis industry, with assets owned and under development across each vertical of the business, including cultivation, extraction, processing and manufacturing, distribution and wholly owned retail. Westleaf believes that being vertically integrated provides significant optionality and defensively positions the company to protect margins across the life cycle of the industry.
Transaction and Option to Purchase Summary
Westleaf, through its wholly owned subsidiary Westleaf Enterprises Inc., purchased 21.4% of the Canndara Shares for $7.5 million cash in December 2018. On the same date, Westleaf acquired the Option to purchase the remaining Canndara Shares for $48.4 million in an all-stock transaction within 75 days from the closing of the investment. The consideration payable by Westleaf on Closing is an aggregate of 21,614,407 Common Shares, at a deemed price of $2.24 per Common Share. Closing is expected to occur on or about January 31, 2019. On Closing, Westleaf will also issue an aggregate of 1,080,720 Common Shares to Inform Management Group Inc.at a deemed price of $2.24 per Common Share, in payment of a finder's fee in respect of the closing the Option exercise. The finder's fee is subject to TSX Venture Exchange acceptance.
The transaction includes maintaining Canndara's founders as part of the senior management team at Westleaf. John Radostits and Ray Yue bring over 50 years of combined experience in the retail, healthcare, hospitality and investment industries to the Westleaf team. John has an extensive background in the retail grocery space, having built up the largest franchisee group under the Sobey's banner; and Ray is responsible for the strategic growth of health care centers and pharmacies in both the private and public health practices in Canada. Both John and Ray are residents of Edmonton and have numerous regional and national business and leadership awards and accolades.
About Prairie Records
Focusing exclusively on densely populated neighbourhoods, high traffic areas, and tourist destinations, Prairie Records retail stores will be situated in some of the most premium retail locations across the country. The foundation of the retail concept is ingrained with a desire to create an unparalleled cannabis purchasing experience through tactile in-store features and product offerings that celebrate and promote the inherent relationship between music and cannabis.
Featuring a rollout of upwards of fifty (50) retail locations through 2020 in markets across Western Canada, Westleaf continues to be committed to becoming a leader in the cannabis retail market in Canada.
About Westleaf Inc.
Westleaf is a vertically integrated cannabis company focused on innovative retail experiences and engaging cannabis brands. Westleaf is rolling out a national retail footprint for its retail concept "Prairie Records", with stores planned for British Columbia, Alberta, Saskatchewan and potentially Ontario. The retail concept leverages the instinctual tie between recreational cannabis and music and redefines the cannabis purchasing experience. For more information, please visit www.westleaf.com or www.prairierecords.ca.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. This news release, forward-looking statements relate, among other things, to: (i) the development of retail cannabis stores and the business and operations of the Westleaf and Canndara; (ii) the number of retail locations Westleaf expects to have by the end of 2020; (iii) the anticipated date of Closing and the occurrence thereof; and (iv) the impact of the Closing on the prospects and business of Westleaf. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and the delay or failure to receive board, shareholder, court or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, Westleaf assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change.
SOURCE Westleaf Inc.
For further information: Bruce Leslie, [email protected] 403-801-7612