Wildflower Brands (SUN-Cse) Letter of Intent for Acquisition of City Cannabis
Apr 9, '19 - NR
Wildflower Brands is pleased to announce that it has entered into a non-binding letter of intent (the "LOI") dated April 3, 2019, to acquire City Cannabis Corp. ("City Cannabis"), a premier licenced cannabis retailer in British Columbia, in exchange for common shares of Wildflower (the "Acquisition"). The final structure of the Acquisition will be determined by the parties following receipt of tax, corporate and securities law advice.
City Cannabis is a cannabis retailer holding two of the three City of Vancouver licences to sell cannabis and the only company with multiple licences in the Province of British Columbia. City Cannabis has been profitably operating various dispensaries in Vancouver since Vancouver commenced licencing cannabis retailers. City Cannabis will be the only B.C.-based cannabis retailer to go public. British Columbia is the heart of cannabis country in Canada with a long history of cannabis production and consumption. As part of City Cannabis' strategy, it is looking for premier locations to operate in, and, its Robson and Granville location is the premier location in Western Canada located at the junction of the Entertainment District and Shopping District of downtown Vancouver. The other City Cannabis licence is located at Fraser Street and East 57th Avenue. City Cannabis has multiple cannabis retail licence applications submitted in the provinces of British Columbia and Alberta.
"City Cannabis and Wildflower are the perfect combination of premier products and a premier consumer retail experience. City Cannabis' retail consumer data and insight will help shape development of Wildflower's product line-up while the retail expertise of City Cannabis will aid Wildflower in its retail expansion. The combination of Wildflower and City Cannabis will form a truly global cannabis company," said William MacLean, Chief Executive Officer of Wildflower.
Pursuant to the terms of the LOI, the Company will acquire 100% of the issued and outstanding common shares in the capital of City Cannabis in exchange for the issuance of 60,000,000 common shares of the Company ("Consideration Shares") at a deemed price per Consideration Share of $0.75 for aggregate consideration of $45,000,000. The LOI also contemplates that, upon the closing of the Acquisition, Krystian Wetulani, City Cannabis' founder and chief executive officer, will join Wildflower as a director and as the chief development officer.
Krystian Wetulani, chief executive officer of City Cannabis says, "Wildflower has a tremendous team that has developed several prominent cannabis brands and we are excited to join with them to bring their branding and marketing expertise to City Cannabis as we expand into the Canadian regulated market."
During the year ended Dec. 31, 2018, City Cannabis had revenues of $7.7M, cost of goods of $4.3M for a gross profit of $3.4M. Administrative expenses were $2.4M with additional losses for a share repurchase and lease buyout for income before taxes of $0.7M for the year ending Dec. 31, 2018. These financial results are management prepared. An audit is being performed now.
City Cannabis has granted Wildflower a 60-day exclusivity period to complete its due diligence and execute a definitive agreement. The completion of the Acquisition is subject to numerous conditions, including but not limited to the following:
the negotiation and execution of a definitive agreement;
completion of satisfactory due diligence by each of Wildflower and City Cannabis; and
receipt of all required regulatory, corporate, shareholder and third-party approvals, including approvals by the Canadian Securities Exchange (the "CSE"), applicable governmental authorities, and the fulfillment of all applicable regulatory requirements and conditions necessary to complete the Acquisition.
Further Information
Further details about the Acquisition will be provided in a comprehensive news release when the parties enter into the definitive agreement.
Investors are cautioned that any information released or received with respect to the Acquisition in this press release may not be complete and should not be relied upon. Trading in the common shares of the Company should be considered highly speculative.
Wildflower is being advised by Borden Ladner Gervais LLP and GMP Securities L.P. GMP Securities L.P. has been engaged to provide a fairness opinion to Wildflower.
About Wildflower
Wildflower Brands is a Vancouver-based company developing and designing brands that focus on plant-based health and wellness products. All of our brands work in synergy toward the goal of becoming a global wellness leader.
For more information, please contact:
Wildflower Brands Inc.
Will Elston
Shareholder Communications
604.559.0420
Corporate Communications:
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