WINNIPEG, Manitoba, Aug. 15, 2022 (GLOBE NEWSWIRE) -- DELTA 9 CANNABIS INC. (TSX: DN) (OTCQX: DLTNF) ("Delta 9" or the "Company") is pleased to announce that today it has entered into an asset purchase agreement (the "Agreement") with 10552763 Canada Corp. (the "Vendor") 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 (the "Transaction").
"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 (the "Purchase Price"). $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 ten (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 August 29, 2022.
For more information contact:
Investor & Media Contact:
Ian Chadsey VP Corporate Affairs
About Delta 9 Cannabis Inc.
Delta 9 Cannabis Inc. is a vertically integrated cannabis company focused on bringing the highest quality cannabis products to market. The Company sells cannabis products through its wholesale and retail sales channels and sells its cannabis grow pods to other businesses. Delta 9's wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical and recreational cannabis and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9's shares trade on the Toronto Stock Exchange under the symbol "DN" and on the OTCQX under the symbol "DLTNF". For more information, please visit www.delta9.ca.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company's future business plans and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including the Company's actual financial results being different from its estimates as well as all risk factors set forth in the annual information form of Delta 9 dated March 31, 2022 which has been filed on SEDAR. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.