13:05:25 EDT Tue 22 Oct 2019
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or Name

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Wildflower Brands Inc
Symbol C : SUN
Shares Issued 67,802,791
Close 2019-04-09 C$ 0.93
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Wildflower to acquire City Cannabis for $45-million

2019-04-09 13:55 ET - News Release

Mr. William MacLean reports


Wildflower Brands Inc. has entered into a non-binding letter of intent dated April 3, 2019, to acquire City Cannabis Corp., a premier licensed cannabis retailer in British Columbia, in exchange for common shares of Wildflower. 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 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 licensing 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's 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 Ave. 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's retail consumer data and insight will help shape development of Wildflower's product lineup, 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 per cent of the issued and outstanding common shares in the capital of City Cannabis in exchange for the issuance of 60 million common shares of the company at a deemed price per consideration share of 75 cents for aggregate consideration of $45-million. The LOI also contemplates that, upon the closing of the acquisition, Krystian Wetulani, City Cannabis's founder and chief executive officer, will join Wildflower as a director and as the chief development officer.

Mr. Wetulani 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 $7.7-million, cost of goods of $4.3-million for a gross profit of $3.4-million. Administrative expenses were $2.4-million with additional losses for a share repurchase and lease buyout for income before taxes of $700,000 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;
  • Receipt of all required regulatory, corporate, shareholder and third party approvals, including approvals by the Canadian Securities Exchange, applicable governmental authorities and the fulfilment 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.

Completion of the acquisition is subject to a number of conditions, including but not limited to, CSE acceptance, requisite shareholder approvals and, if applicable, disinterested shareholder approval. Where applicable, the acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the acquisition will be completed as proposed or at all.

Investors are cautioned, except as disclosed in the management information circular of the company, to be prepared in connection with the acquisition, any information released or received with respect to the acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of Wildflower should be considered highly speculative.

Wildflower is being advised by Borden Ladner Gervais LLP and GMP Securities LP. GMP Securities has been engaged to provide a fairness opinion to Wildflower.

About Wildflower Brands Inc.

Wildflower Brands is a Vancouver-based company developing and designing brands that focus on plant-based health and wellness products.

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