Toronto Weed Producer Seals Deal For Over $100M In Annual Revenue As RWB Finalizes Aleafia Health Buyout

Red White & Bloom Brands Inc. RWB RWBYF has wrapped its previously announced acquisition of Aleafia Health Inc. ALEAF and its subsidiaries.

What Happened

Under the deal, RWB (PV) Canada Inc., a wholly owned subsidiary of RWB, acquired the intellectual property assets of Aleafia Health and subscribed for shares in the capital of each of Emblem Cannabis Corporation, Canabo Medical Corporation and Aleafia Retail Inc.

Total consideration for the transaction was $31,667,700, including:

• A release of all amounts outstanding and obligations payable by the Aleafia Group under the Aleafia senior secured loan agreement and the debtor-in-possession financing amounting to $24,897,493; and
• Cash consideration of up to $6,770,207.

As part of the deal, RWB also acquired a 9.4% ownership interest in One Plant (Retail) Corp., which operates a network of over 40 corporately owned and franchised cannabis retail locations in Ontario.

See also: Toronto Weed Producer Announces Successful Bidder For Sale And Investment Process

Why It Matters

The acquisition provides to RWB:

• Recreational cannabis sales channels in five Canadian provinces, including Ontario, Alberta, British Columbia, Saskatchewan,and Manitoba;
• Medical cannabis sales channels across Canada direct to patient subscribers;
• International cannabis sales channels via export to Australia, Germany and the United Kingdom;
• A virtual medical cannabis clinic;
• An 86-acre, low-cost, outdoor cultivation site located in Port Perry, Ontario, featuring 35,000 square feet of federally licensed indoor drying and storage facilities with a cultivation capacity of over 30,000 kilograms of cannabis annually; and
• A 65,000-square-foot, federally licensed, EU-GMP-specified cultivation, processing, and packaging facility located in Paris, Ontario.

"The Aleafia acquisition aligns seamlessly with RWB's goals of expanding its global footprint and fortifying its position in global cannabis markets," Eddie Mattei, CFO of RWB said. "With the financial support and ongoing commitment provided by RWB through the CCAA proceedings, Aleafia has already realized the benefit of multiple cost and cash improvements that will contribute to the combined company's prospective financial performance.”

What's Next

The combined entity is expected to generate CA$140 million ($104.3 million) in distribution and retail annualized revenues across North American and international sales channels, RWB said in a press release on Monday.

The Toronto-based company expects that the transaction will be accretive on an EBITDA basis in fiscal 2024.

"We anticipate achieving annual synergies exceeding CA$12 million between RWB and the Aleafia Purchased Entities while promoting revenue growth, margin contribution, and value for all shareholders," Colby De Zen, president of RWB said.

RWB Price Action

Red White & Bloom's shares traded 7.6923% lower at $0.06 per share at the time of writing on Tuesday morning.