International Cannabis Venture Capitalist Couche-Tard recently revealed its intention to increase its stake in Fire & Flower, a cannabis retail giant. As of December 2021, Couche-Tard held around 20-21% of the shares of the Canadian company, but it aspires to acquire more – up to 35% in the coming weeks.
Couche-Tard, a prominent multinational operator of convenience stores, is keen to become a top name among global cannabis investors. His resilience can be seen in his rapid acquisition of substantial shares in Canada’s leading cannabis retailer.
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This announcement suggests that before the end of the second quarter of the year, Couche-Tard could hold up to 8.2 million shares of Fire & Flower. This exchange of intent would occur once the Circle K convenience stores exercised their warrants.
Information on the contemplated acquisition
As previously mentioned, Couche-Tard intends to buy these shares by modulating their warrants as soon as Fire & Flower’s annual results are released and published in a few days. Once the acquisition is completed, the Quebec convenience store giant would have increased its initial stake by at least 11%. From 14.5% to 35%. In fact, it’s more than double the amount of his existing shares.
Different press releases peg the total amount of the company’s Fire & Flower shares at 21.5% of the total amount. They claim the information was leaked through a regulatory filing some time ago.
Who is Couche-Tard Inc.?
Food Couche-Tard Inc. is a prominent name in the North American convenience and fuel retail scene. The giant corporation operates in more than 20 countries and territories. With more than 14,000 physical stores located in strategic locations around the world, Couche-Tard inc. offers approximately 10,800 zones with fuel for road transport.
Alimentation Couche-Tard has an easily recognizable brand. It is identifiable because it is found outside some of the largest independent convenience stores in the United States, its subsidiary, Circle K is another popular company in the States.
The parent company is one of the major forces in the convenience store industry and the road transport fuel retail market in Scandinavia, the Baltics, Ireland and Canada. Poland and Hong Kong SAR are two other places that feel the company’s presence. Today, Alimentation Couche-Tard employs more than 120,000 people in its vast network.
flower of fire
Fire & Flower is one of Canada’s leading cannabis retailers. The company is one of the first to enter the cannabis-friendly Canadian market.
Fire & Flower is highly respected for its use of a centralized, technology-powered operating system. The cannabis retail giant has at least 100 company-owned stores in different parts of the country. The company often capitalizes on its tech-driven sister company, Hifyre, to push its retail operations to new heights. With that comes an additional high-margin freelance revenue stream.
Fire & Flower skilfully guides its customers through the new and sometimes complex cannabis ecosystem. It achieves this through proper retail practices and educational materials. At the same time, digital retail and analytics platform Hifyre regularly empowers small retailers to optimize their relationships with potential, new and existing consumers.
The Canada-based company has an effective management team that strives to combine years of experience in the logistics, retail and technology industries to drive its cannabis-based business forward. Some of the brands owned and operated by Fire & Flower’s multi-banner cannabis retail operations include the Friendly Stranger, Happy Dayz and Hotbox brands. Fire & Flower Holdings legally owns all of its issued and outstanding shares. A few of the company’s retail stores are in the provinces of Alberta, British Columbia, Ontario, Saskatchewan, Yukon Territory and Manitoba.
More details on the agreement
Alimentation Couche-Tard has successfully positioned itself as a strategic investor in the North American cannabis space. The company plans to expand its business to other companies and territories, particularly in the United States. It plans to use its strategic licensing agreement with the US arm of Fire & Flower to expand into the country. It remains unclear whether or not the business will hold until incremental changes are introduced to the federal cannabis regulatory regime.
Fire Holdings confirmed that it is aware of the intention of Alimentation Couche-Tard inc. to purchase more than 8 million of its common shares.
Couche-Tard’s subtle entry into the cannabis market dates back to July 2019. At that time, the company announced its mandate to provide Fire & Flower with funding to support its expansion plans. In 2019, ACT invested an estimated $26 million in Fire & Flower. In turn, he received around 9.9% of his total shares. A large part of Couche-Tard’s investment was devoted to opening new corporate stores for the network. The upcoming investment can also be used for the same purpose.
The Fire & Flower team say they would continue to build on their operational union with the ACT. Once funding is received, cannabis retail stores Fire and Flower plan to open new stores near existing Circle K stores in relatively new markets in Canada. A few weeks ago, Fire & Flower revealed that one of its wholly-owned subsidiaries, Open Fields Distribution, had entered into a one-year cannabis distribution agreement with the Manitoba Liquor and Lotteries Department. In other words, Open Fields Distribution would begin offering distribution of adult-use cannabis items from registered producers to licensed retailers in Manitoba. Additionally, Open Fields also serves areas in and around Saskatchewan.
More information will be revealed once Alimentation Couche-Tard exercises its warrants. The total exercise price of this acquisition of shares will be determined on the basis of the average cost of the control shares of Fire & Flower calculated over the period of 20 days.
According to the Series B warrant certificate, all exercise prices of Series B warrants must not exceed $18.75 per share, while the minimum price is $4.77.
You can access Fire & Flower’s fourth quarter and full year 2021 financial statements at the company’s website.
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