SNDL enters into a purchase agreement to acquire four Dutch Love locations

CALGARY — SNDL Inc., has entered into an agreement with Lightbox Enterprises Ltd. to acquire four cannabis retail stores operating under the Dutch Love Cannabis banner.

Under the agreement, SNDL will acquire from Lightbox the rights to four Dutch Love stores and the rights to use certain Dutch Love related intellectual property for a total consideration of $7.8 million.

SNDL will acquire the rights to three Dutch Love stores in British Columbia and one store in Ontario. The combined assets generated annual revenue of $11.5 million in 2022, with an average gross margin of 36.5 per cent. The completion of the acquisition is expected to further solidify SNDL’s position as a multi-banner cannabis retail operator by enhancing the company’s market share and its exposure to a broader consumer base in two key markets.

“We are excited by this opportunity to expand SNDL’s retail network,” said Zach George, CEO, SNDL. “We believe we have chosen the top performing Dutch Love stores located on some of the best real estate available. This acquisition creates a new opportunity to work with Canada’s top licensed producers to deliver high-quality cannabis and experiences to the Dutch Love target shopper.”

The transaction is expected to be completed in the context of Lightbox’s proceedings under the companies’ Creditors Arrangement Act from the Supreme Court of British Columbia. On December 2, 2022, the court granted an order that approved a sale and investment solicitation process in respect of the assets, undertakings and properties of Lightbox, and the agreement is the result of the SISP process.

Consideration for the transaction will consist of:

• Cash in the amount of $1.5 million payable to Lightbox,
• The cancellation of the $3.0 million debt owed by Lightbox to SNDL
• $3.3 million payable in common shares of SNDL at a price per share based on the 10-day VWAP of the SNDL shares on the closing date to be issued to Lightbox.